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Author: 


Fillebrown,  Charles 
Bowdoin 

Title: 

The  principles  of  natural 
taxation 

Place: 

Chicago 

Date: 

1917 


MASTER   NEGATIVE   « 


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I 


Business 

D130 

F48 


Fillebrovm,  Charles  Bov/doin,  1842-1917. 

The  principles  of  natural  taxation,  showing 
the  origin  and  progress  of  plans  for  the  pay- 
ment of  all  public  expenses  from  economic  rent 
by  C.  B.  Fillebrovm  ...  with  portraits. 
Chicago,  A.  C.  McClurg  &  co.,  1917. 

XX  p.,  11.,  281  p.  ports,  (incl.  front.) 
20cm. 

"A  revision  and  enlargement  of  A  single  tax 
handbook  for  1913."— Pref. 


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THE  LIBRARIES 


GRADUATE 

SCHOOL  OF  BUSINESS 

LIBRARY 


Given  by 

Mrs*  Hichard  IL  Halg 


I  ti. 
I  If 


THE  PRINCIPLES  OF  NATURAL  TAXATION 


HENRY  GEORGE 
1839- 1897 


I 


i 


The  Principles  of 
Natural  Taxation 


SHOWING  THE  ORIGIN  AND  PROGRESS  OF  PLANS 

FOR     THE     PAYMENT    OF     ALL    PUBLIC 

EXPENSES  FROM  ECONOMIC  RENT 


BY 


C.  B.  FILLEBROWN 

AMiAor  «f  "A.B.  C.  of  Taxation,**  *' Taxation,**  Etc.,  Etc. 


WITH  PORTRAITS 


'       V 


CHICAGO 

A.  C.  McCLURG  &  CO. 

1917 


/ 


Jjot^^*-"'**-'*^ 


Copyright 
A.  C.  McClurg  &  Co. 


Published  February,  1917 


Copyrighted  in  Great  Britain 


w.  r.  MAu.  ruitrrif*  comfAUT,  chioam 


Gift 


'})t4c  .  /^fJe-iV  ^'  7/tz:<^ 


T 


>- 

•^ 


•i      1 


To  the 

Pi.OFESSORS  OF  POLITICAL  ECONOMY 

Whose  courtesy,  interest 
and  obliging  cooperation 
have  greatly  forwarded 
this  volume,  it  is  re- 
spectfuUy  dedicated  by 

The  Compiler. 


I.  Ii 

! 


J  ! 

i: 


\' 


PREFACE 

STUDENTS  of  Progress  and  Poverty  are  haunted  by 
glimpses  of  worthies  more  or  less  ancient  who,  in  the  last 
century,  have  previsioned  the  doctrine  of  Henry  George.  The 
object  of  this  compilation  is  to  trace  the  metamorphosis  of 
the  land  question  into  the  rent  question;  of  the  equal  right 
to  land  into  the  joint  right  to  the  rent  of  land;  of  the  common 
use  of  the  earth  into  the  collective  enjoyment  of  ground  rent; 
of  the  nationalization  of  land  into  the  socialization  of  its 
rent;  of  private  property  in  land,  including  the  private  appro- 
priation of  its  rent,  into  the  public  appropriation  of  that  rent 
without  disturbance  of  the  private  ownership  of  land.  The 
undertaking,  thus  presented,  is  to  disclose  the  genesis,  and 
observe  the  development,  of  a  conception  of  economic  rent 
and  the  evolution  of  this  concept  in  the  minds  of  men, 
closely  followed  as  it  has  been  by  the  idea  of  the  taxation  of 
economic  rent,  and  its  corollaries.  "  Rent  and  the  Taxation 
of  Rent "  would  be  accurately  suggestive  of  the  aim  and  com- 
pass of  the  book.  The  arrangement  of  its  contents  is  intended 
to  be  in  the  order  of  importance  to  the  reader,  the  studied  aim 
being  to  satisfy  his  economic  understanding  with  the  least 
mental  exertion. 

A  multitude  of  lawgivers  and  philosophers,  from  Moses 
down,  have  been  invoked  from  time  to  time  to  solve  the  great 
social  questions  of  the  world  by  putting  the  superabundance 
of  the  earth  within  reach  of  its  millions,  but  in  their  teaching 
nothing  whatever  is  found  of  the  nature  and  office  of  economic 

rent    It  is  only  within  the  last  hundred  years  that  any  of 

•• 

Vll 


•  •• 

▼m 


Preface 


the  authorities  on  the  land  problem  appear  to  have  been 
impressed  with  the  truth  that  the  answer  to  their  questions  is 
to  be  found  in  the  cause,  magnitude,  and  treatment  of  eco- 
nomic rent.  It  is  wonderfully  interesting,  moreover,  to  note 
with  what  rapidity  this  truth  has  grown  into  the  understanding 
of  those  who  in  more  recent  years  have  given  it  their  con- 
sideration. Incidentally,  this  book  challenges  a  host  of  eco- 
nomic errors  and  omissions,  collective  or  individual,  grave 
or  venial,  among  which  are :  ( i )  that  the  indestructible  prop- 
erties of  the  soil  are  a  source  of  rent;  (2)  that  agricultural 
values  should  not  equally  with  urban  values  be  classed  as 
site  values;  (3)  that  "to  appropriate  rent  by  taxation"  means 
the  abolition  of  the  institution  of  private  property  in  land; 
(4)  that  the  joint  right  to  the  rent  of  land  is  a  logical  de- 
duction from  the  equal  right  to  land  itself;  (5)  failure  to 
emphasize  Henry  George's  distinct  transition  from  common 
right  to  land  to  joint  right  to  rent;  (6)  omission  to  emphasize 
the  fact  that  the  assessed  value  of  land  is  an  untaxed  value; 
(7)  that  when  the  storekeeper's  rent  is  raised,  he  has  got  to 
raise  the  prices  of  his  goods.  While  this  volume  is  a  revisioii\ 
/and  enlargement  of  -^  Single  Tax  Handbook  for  1913,  which 
/it  was  thought  might  reappear  at  intervals,  it  is  issued  with 
/  the  idea  of  permanence,  as  representing  the  best  authorities, 
[  early  and  late,  upon  the  development  of  the  idea. 

Only  those  writers  are  given  leading  space  in  this  collec- 
tion who  have  been  pioneers  and  specialists  in  this  field  of 
thought.  Numerous  other  writers  whose  names  have  been 
associated,  some  of  them  intimately,  with  Henry  George 
cannot  claim  classification  with  him  when  tested  by  the  tenets 
which  they  have  advocated.  An  analysis  of  the  real  views  of 
these  writers  will  be  given  in  an  Appendix.  Much  care  has 
been  exercised  in  trying  to  make  this  analysis  just  and  fair. 


i 


t 


Preface  ^ 

although  the  compiler  is  fully  conscious  that  in  criticism  it 
is  not  easy  to  avoid  mistakes.  Those  who  are  curious  as 
to  the  proofs  or  doubtful  of  the  truth  of  what  is  offered 
may  easily  assure  themselves  by  reference  to  original  texts. 
The  intent  has  been  that  anything  of  questionable  pertinence, 
or  anything  that  may  hinder  the  mind  from  direct  approach 
to  the  subject,  should  find  its  subordinate  place  in  an  Appen- 
dix, in  order  that  the  volume  proper  may  be  reserved  for  the 
collection  of  what  so  far  as  possible  may  be  relied  upon  as 
sound  doctrines. 

It  is  hoped  that  the  student  will  find  here  most  of  the 
essential  facts  and  principles  of  taxation  clarified  by  persistent 
discussion  and  backed  by  the  agreement  of  the  ablest  eco- 
nomic authorities.  A  very  complete  index  serves  for  the 
ready  location  of  even  scattered  references. 

For  many  excellencies  in  this  book,  I  am  under  lasting 
obligation  for  the  suggestions  of  my  friends  who  have  read 
the  whole  manuscript,  Mr.  Bolton  Hall,  Mr.  Charles  T.  Root 
and  Mr.  Alexander  Mackendrick. 

C.  B.  F. 


-':• 


m 


/• 


li 


CONTENTS 

PAGE 

Preface vii 

Introduction xiii 

Part  One:  The  Authorities 

CHAPTER 

I  Adam  Smith I 

II  John  Stuart  Mill 5 

III  Patrick  Edward  Dove II 

IV  Edwin  Burgess i8 

V  Sir  John  Macdonell 23 

VI    Henry  George 38 

VII    Rev.  Edward  McGlynn 6$ 

VIII    Thomas  G.  Shearman 75 

Part  Two:  Side-Lights 

IX    A  Burdenless  Tax :  The  Threefold  Support  Upon 

which  the  Single  Tax  Rests 123 

X    Land:   The  Rent  Concept  —  The  Property  Con- 
cept       150 

XI    Taxation  and  Housing:   The  Taxation  of  Privi- 
lege       161 

XII    Thirty  Years  of  Henry  George,  with  a  Record  of 

Achievements 171 

XIII     Henry  George  and  the  Economists 190 

. 


.Sm 


IJ- 


^:li 


xii  Contents 

PAGE 

XIV     The  Professors  and  the  Single  Tax 201 

XV     A  Catechism  of  Natural  Taxation 218 

Appendix 

I     The  Physiocrats 241 

II     Thomas  Spence 243 

III  William  Ogilvie 248 

IV  Thomas  Paine 258 

V    Herbert  Spencer 264 

Index       2^^ 


PORTRAITS 

PAGE 

Henry  George Frontispiece 

Edwin  Burgess       ^^ 

Sir  JOHN  Macdonell   . 22 

Thomas  G.  Shearman 74 


ill 


IP 


' 


I 


INTRODUCTION 

THE  proposal  to  obtain  all  public  revenue  from  economic 
rent,  popularly  known  as  the  single  tax,  is  based  upon  the 
well-known  theory  that  such  rent  is  a  social  product,  a  form 
of  income  which  arises  from  the  growth  of  population  and 
the  energy  and  enterprise  of  the  people  as  a  whole,  rather  than 
from  any  productive  energy  or  enterprise  by  the  landowner 
who  receives  it. 

Proposals  for  reform  bearing  a  more  or  less  remote  resem- 
blance to  the  "  single  tax,"  and  based  upon  alleged  principles 
of  justice  or  expediency,  antedated  the  Ricardian  doctrine  of 
rent.  Although  based  upon  various  principles  and  frequently 
bearing  only  a  remote  resemblance  to  the  single  tax,  they  have, 
nevertheless,  considerable  significance.  In  the  first  place,  the 
hostility  to  landlordism  which  they  generated  has  had  much 
to  do  with  the  spirit  and  vitality,  especially  in  various  mis- 
taken features,  of  the  modern  movement.  In  the  second 
place,  the  defective  principles  upon  which  these  propositions 
were  based  have  to  some  extent  interpenetrated  the  modem 
movement,  resulting  in  confusion  of  thought  even  among  econ- 
omists of  today.  It  is  hoped  that  by  an  examination  of  some 
of  these  earlier  proposals  the  distinction  between  them  and 
the  present  fiscal  proposal  to  obtain  all  revenue  from  eco- 
nomic rent  may  become  apparent,  and  the  aforesaid  con- 
fusion may  be  removed. 

It  will  be  seen  that  those  earlier  reforms  were  suggested 
upon  the  theory  that  land  is  the  heritage  of  the  race  as  a 
whole,  to  which,  in  its  original  state  as  a  gift  of  the  Creator, 

XV 


I        ,«;l 


xvi 


Introduction 


! 


all  men  have  equal  rights.  In  consequence  of  this  supposed 
natural  right  of  all  men  to  all  the  land,  some  were  led  to  deny 
the  right  of  private  ownership  by  individuals  to  any  of  it,  and 
to  propose,  as  a  remedy  for  the  injustice  to  the  disinherited, 
either  a  periodical  parcelling  out  of  the  land,  or  state  national- 
ization. Whatever  weight  may  be  attached  to  this  hypothetical 
premise  and  conclusion,  it  is  quite  irrelevant  to  the  question 
of  natural  taxation  and  has,  unfortunately,  proved  a  stumbling- 
block  to  many  minds  in  the  way  of  understanding  that  theory. 
The  appropriation  by  taxation  of  economic  rent  to  the  com- 
munity as  their  joint  right  is  amply  justified  by  the  fact  that 
such  rent  is  a  social  product,  a  form  of  income  due  not  to  the 
efforts  of  the  individual  but  to  the  joint  activities  of  the  com- 
munity. This  will  become  apparent  to  the  reader  when  he 
studies  the  nature  and  origin  of  economic  rent. 

The  complete  transition  from  the  theory  of  equal  rights 
to  land,  to  an  understanding  of  the  joint  rights  to  rent,  is 
extremely  interesting,  and  repetition  cannot  stale  it. 

Much  has  been  written  in  exaltation  of  the  "visions"  of 
dreamers  who  each  believes  himself  to  be  a  repository  of  a 
special  revelation.  Henry  George  added  his  quota  to  this 
record  and  put  his  seal  upon  the  "  vision  "  of  the  equal  right 
of  all  men  to  the  land.  All  writers  have  agreed,  however,  tha* 
the  division  of  the  benefits  of  equal  right  to  land,  as  the  genera- 
tions of  men  proceed,  is  a  mechanical  impossibility.  The  bene- 
fits of  rent,  on  the  other  hand,  will  diffuse  themselves  auto- 
matically and  inevitably  under  the  single  tax,  while  the 
obstacles  to  such  diffusion  will  decrease  in  proportion  as 
economic  rent  increases. 

In  the  case  of  "no-rent"  land,  the  benefit  on  the  one  hand 
of  its  impossible  division  and  on  the  other  hand  of  the  auto- 
matic diffusion  of  its  rent  at  or  near  the  margin  of  cultivation 


Introduction 


xvu 


would  be  but  trifling.  For  this  reason  there  is  danger  of 
overrating  the  benefit  to  mankind  (even  as  illustrations  of 
the  single  tax)  of  rural  settlements,  such  as  Arden,  Fair- 
hope,  Harvard,  and  others.  Further  proof  of  this  may  be 
found  in  the  acknowledged  failure  of  many  experiments  of  a 
philanthropic  character  in  making  land  free  to  the  settlement 
of  labor. 

So,  in  retrospect,  we  are  able  to  bear  witness  to  three  cul- 
minating steps,  recorded  almost  within  a  single  decade. 

(i)  Henry  George  presented  his  triumphant  alternative  in 
"the  appropriation  of  rent  by  taxation."  This  was  the  bright 
oasis  in  the  desert  of  sterile  "vision"  to  which  (leaving  out 
of  account  the  equal  right  to  land  itself)  he  conducted  us. 

(2)  A  dozen  years  later,  as  though  to  clear  up  the  charge 
of  "nationalization,"  he  formally  substituted  for  the  equal 
right  to  land  the  common  right  to  rent,  in  the  following  gentle 
rebuke :  "  The  primary  error  of  the  advocates  of  land  nation- 
alization is  in  their  confusion  of  equal  rights  with  joint  rights. 
In  truth,  the  right  to  the  use  of  land  is  not  a  joint  or  common 
right,  but  an  equal  right;   the  joint  or  common  right  is  to 

rent.^ " 

(3)  Mr.  Shearman,  who  entered  the  discussion  in  1892, 
ignoring  entirely  the  "prophecy"  and  the  "vision"  feature, 
and,  disregarding  the  question  of  equal  rights,  declared  the 
common  enjoyment  of  rent  to  be  Nature's  method  of  taxa- 
tion. He  began  and  ended  where  George  left  off  with  the 
taxation  of  rent. 

Authorities.  —  Of  the  principal  authorities  whose  contri- 
butions to  the  theory  of  natural  taxation  form  the  body  of 
this  volume,  the  first  place  is  given  to  Adam  Smith.    His  name 

1  George,  Henry,  A  Perplexed  Philosopher,  p.  242,  Doubleday,  Page  & 
G).,  New  York. 


xviu 


Introduction 


is  placed  at  the  head  of  the  British  procession  as  a  tribute 
to   his   great    fame   and   achievements   which   were    far    in 

advance  of  his  time. 

If  we  were  dealing  merely  with  the  nature  and  origin  of 
economic  rent,  the  next  place  would  be  given,  unquestionably, 
to  David  Ricardo,  who  was  the  first  economist  fully  to  develop 
this  important  problem.  But  Ricardo  made  no  notable  con- 
tribution to  the  problem  of  the  taxation  of  rent,  otherwise  his 
name  would  be  included  in  this  list  of  authorities. 

John  Stuart  Mill  (1848),  an  English  economist,  and  Pat- 
rick Edward  Dove  (1850),  an  English  squire,  adequately 
cover  the  middle  period  of  the  nineteenth  century. 

Edwin  Burgess  (1859),  a  tailor  from  England,  and  Sir 
John  Macdonell  (1873),  an  English  collegian,  spanned  the 
next  quarter  of  the  century,  1850  to  1875.  Both  may  be  new 
to  the  general  reader  of  today,  but  each  efficiently  accom- 
plished his  task. 

In  the  last  quarter  of  the  century  the  completion  of  the 
work  fell  to  American  hands.  Henry  George,  a  journeyman 
printer  of  rare  insight  and  eloquence,  and  Thomas  G.  Shear- 
man, one  of  the  ablest  of  New  York  lawyers,  left  the  doctrine 
of  natural  taxation  in  a  form  to  which  little  has  been  added 
except  by  way  of  reiteration  and  illustration.  Shearman,  as  it 
were,  supplemented  with  a  publicist's  bill  of  particulars  a  great 
moralist's  declaration  of  rights. 

It  can  hardly  be  out  of  place  here  to  present  an  answer  to 
a  question  which  naturally  occurs.  Why  have  not  Mr.  Shear- 
man's writings  found  a  wider  notice?  One  simple  answer 
should  be  offered.  A  dozen  years  elapsed  between  the  appear- 
ance of  Progress  and  Poverty  and  Mr.  Shearman's  Natural 
Taxation,  and  the  confirmed  Henry  George  "moral  re- 
formers," with  only  an  occasional  exception,  "sat  down" 


Introduction 


XIX 


upon  Mr.  Shearman,  dubbing  him  a  "mjere  fiscal  reformier." 
In  a  climax  of  practical  absurdity  these  critics  insisted  upon 
putting  him  outside  the  orthodox  pale  as  a  "limited  Single 
Taxer,"  because  in  comparing  the  taxes  and  the  estimated 
ground  rent  of  his  own  day  he  found  that,  as  a  matter  of 
fact,  the  taxes  absorbed  less  than  one-half  of  the  ground 
rent.     He  distinctly  said: 

In  the  long  run  there  will  be  no  such  question  to  decide.  The 
honest  needs  of  public  government  grow  faster  than  population, 
and  fully  as  fast  as  wealth  itself.     Local  taxation  will  increase 

rapidly ;  and  it  ought  to  do  so This  does  not  imply  that 

ground  rent  will  not  be  sufficient  to  supply  many,  possibly  all,  of 
those  additions  to  human  happiness  which  Henry  George  has 
pictured  in  such  glowing  words.  But  such  extensions  of  the 
sphere  of  government  must  take  place  gradually;  or  they  will 
be  ruinous  failures,  simply  because  the  state  cannot  at  once 
furnish  the  necessary  machinery  for  their  successful  operation.* 

Instead  of  welcoming  the  reinforcement  of  this  princely 
Apollos  for  his  watering  of  the  tree  which  their  Paul  had 
planted,  they  rejected  his  teaching  as  tainted.  Single  Taxers 
having  set  such  a  pace  of  disparagement  themselves,  what 
could  be  expected  of  the  outer  world? 

Sidelights,  —  "A  Burdenless  Tax"  (chap,  ix),  expresses 
the  effort  to  make  clear  in  kindergarten  fashion  the  old  fact 
that  a  land  tax  ceases  to  be  a  tax.  "  Land :  the  Rent  Concept ; 
the  Property  Concept"  (chap,  x)  aims  to  correct  prevalent 
errors.  "Taxation  and  Housing"  (chap,  xi)  points  out  the 
accelerating  ills  of  privilege.  "Thirty  Years  of  Henry 
George"  (chap,  xii)  gives  a  resume  of  the  principal  features 
of  the  movement,  whether  fruitful  or  unfruitful.  "Henry 
George  and  the  Economists"    (chap,   xiii)    is  a  review  of 

1  Shearman,  Thomas  G.,  Natural  Taxation,  chap,  ix,  p.  133,  Doubleday, 
Page  &  Co.,  New  York. 


i 


ir*j 


III 


«  Introduction 

Henry  George's  arraignment  of  Herbert  Spencer  as  "the 
Perplexed  Philosopher."  "The  Professors  and  the  Single 
Tax"  (chap,  xiv)  is  radical  criticism  of  particular  posi- 
tions, tempered  with  liberal  appreciation  of  professors  in 
general.  It  is  a  defense  of  the  Single  Tax  against  a  formi- 
dable body  of  undigested  criticism  which  professors  as  a  class 
would  not  indorse.  The  "Catechism"  (chap,  xv)  con- 
tains definitions  of  nearly  all  the  general  terms  used  in  dis- 
cussing taxation. 

Appendix,  — The  estimate  here  given  of  physiocratic 
thought  miay  provoke  surprise  and,  possibly,  temporary  re- 
sentment, but  it  is  believed  that  when  better  understood  the 
physiocratic  doctrine  will  be  found  to  have  little  in  common 
with  the  single-tax  theory  of  today.  Spence,  a  teacher  by 
profession,  got  little  if  any  beyond  the  assumption  by  the 
commimity  of  both  land  and  improvements;  while  Ogilvie,  a 
university  man,  though  he  failed  to  apprehend  the  social 
source  of  economic  rent,  yet  failed  but  by  a  hair's  breadth. 
The  more  familiar  one  becomes  with  the  story  of  all  these 
men,  the  less  is  the  wonder  that  Henry  George  and  others 
have,  with  due  acknowledgments,  passed  them  lightly  over. 

The  vanishing  value  of  the  Herbert  Spencer  chapter  lies 
in  its  interpretation  of  his  Social  Statics  of  1850  and  his 
Justice  of  1892.  Spencer,  in  common  with  Henry  George  and 
many  of  his  alleged  disciples,  asserted  valiantly  that  private 
property  in  land  was  wrong.  Coming  later  to  realize  that  this 
position  was  imtenable,  he  simply  recanted  the  first  six  sections 
of  his  Social  Statics  and  retired  into  the  wilderness,  while 
George,  advancing  his  ground  from  property  in  land  to  prop- 
erty in  the  rent  of  land,  led  his  people,  not  only  to  Pisgah's 
height,  but  triumphantly  into  the  Promised  Land  itself. 


THE  AUTHORITIES 


I 


IP 


CHAPTER  I 

Adam  Smith,  1739-1790 

ADAM  SMITH,  to  whom  is  usually  assigned  the  honor  of 
raising  political  economy  to  the  dignity  of  a  science,  was 
bom  at  Kirkcaldy,  in  Scotland,  in  1723.  He  was  educated  at 
Glasgow  and  Oxford,  and  was  for  years  a  professor  in  the 
University  of  Glasgow.  He  spent  two  years  in  travel  on  the 
Continent  as  tutor  to  the  young  Duke  of  Buccleuch.  During 
these  travels  his  mind  received  perceptible  stimulus  from  the 
physiocrats,  with  whom  he  came  much  in  contact.  The  ten 
years  following  he  spent  in  studious  retirement  at  Kirkcaldy 
reflecting  upon  the  economic  problems  to  which  his  mind  had 
been  directed  during  his  travels.  At  the  end  of  this  period 
his  epoch-making  work,  an  Inquiry  into  the  Nature  and 
Causes  of  the  Wealth  of  Nations,  appeared,  a  work  which 
even  after  the  lapse  of  nearly  a  century  and  a  half  still  forms 
the  groundwork  of  economic  theory. 

In  this  great  work  we  find  most  of  the  broad  economic 
laws  which  characterize  the  science  of  today  either  fully  elab- 
orated or  hinted  at,  and  the  whole  arranged  in  a  scheme  of 
orderly  development,  showing  the  power  of  his  mind  for  con- 
nected and  comprehensive  grasp  of  principle.  The  prevailing 
"mercantile  system"  was  attacked  and  its  fallacy  revealed. 
The  wealth  of  a  country  was  shown  to  depend  upon  the  skill 
with  which  its  labor  is  applied,  and  not  upon  the  gold  and 
silver  within  its  borders.  The  gains  from  the  division  of  labor 
were  explained  and  the  true  nature  of  money  was  elucidated 


n 


ifli 


I 


2  The  Principles  of  Natural  Taxation 

The  laws  of  price  and  value  were  discussed,  and  the  nature 
and  function  of  capital.  The  laws  of  the  distribution  of  the 
social  income  in  wages,  profits,  and  rent  were  also  developed. 
In  regard  to  rent,  the  honor  of  fully  developing  its  nature 
and  law  is  usually  assigned  to  Ricardo.  While  Smith  hinted 
at  the  true  relation  between  rent  and  price,  he  yet  believed 
that  ground  rent  formed  a  part  of  price.  Although  he  fell 
but  little  short  of  a  complete  understanding  of  the  nature 
of  rent,  he  was  in  fact  more  than  a  hundred  years  ahead  of 
his  contemporaries,  while  in  perceiving  the  fitness  of  rent  as 
a  source  of  revenue  to  the  government  he  anticipated  Henry 
George  by  a  century.  The  passage  containing  his  plea  for 
the  taxation  of  ground  rent  is  in  every  way  so  forceful  and 
admirable  that  it  deserves  to  be  reproduced  in  full. 

Ground  rents  are  a  still  more  proper  subject  of  taxation  than 
the  rent  of  houses.  A  tax  upon  ground  rents  would  not  raise 
the  rents  of  houses.  It  would  fall  altogether  upon  the  owner 
of  the  ground  rent,  who  acts  always  as  a  monopolist,  and  exacts 
the  greatest  rent  which  can  be  got  for  the  use  of  his  ground. 
More  or  less  can  be  got  for  it  according  as  the  competitors  hap- 
pen to  be  richer  or  poorer,  or  can  afford  to  gratify  their  fancy 
for  a  particular  spot  of  ground  at  a  greater  or  smaUer  expense. 
In  every  country  the  greatest  number  of  rich  competitors  is 
in  the  capital,  and  it  is  there  accordingly  that  the  highest  ground 
rents  are  always  to  be  found.  As  the  wealth  of  those  competitors 
would  in  no  respect  be  increased  by  a  tax  upon  ground  rents, 
they  would  not  probably  be  disposed  to  pay  more  for  the  use 
of  the  ground.  Whether  the  tax  was  to  be  advanced  by  the  inhab- 
itant, or  by  the  owner  of  the  ground,  would  be  of  little  impor- 
tance. The  more  the  inhabitant  was  obliged  to  pay  for  the  tax, 
the  less  he  would  incline  to  pay  for  the  ground ;  so  that  the  final 
payment  of  the  tax  would  fall  altogether  upon  the  owner  of 
the  ground  rent.  The  ground  rents  of  uninhabited  houses  ought 
to  pay  no  tax. 

Both  ground  rents  and  the  ordinary  rent  of  land  are  a  species 
of  revenue  which  the  owner,  in  many  cases,  enjoys  without  any 


'i  I 


Adam  Smith,  1739-1790 


care  or  attention  of  his  Own.  Though  a  part  of  this  revenue 
should  be  taken  from  him  in  order  to  defray  the  expenses  of 
the  state,  no  discouragement  will  thereby  be  given  to  any  sort 
of  industry.  The  annual  produce  of  the  land  and  labor  of  the 
society,  the  real  wealth  and  revenue  of  the  great  body  of  the 
people,  might  be  the  same  after  such  a  tax  as  before.  Ground 
rents  and  the  ordinary  rent  of  land  are,  therefore,  perhaps,  the 
species  of  revenue  which  can  best  bear  to  have  a  peculiar  tax 
imposed  upon  them. 

Ground  rents  seem,  in  this  respect,  a  more  proper  subject  of 
peculiar  taxation  than  even  the  ordinary  rent  of  land.  The 
ordinary  rent  of  land  is,  in  many  cases,  owing  partly  at  least  to 
the  attention  and  good  management  of  the  landlord.  A  very 
heavy  tax  might  discourage  too  much  this  attention  and  good 
management.  Ground  rents,  so  far  as  they  exceed  the  ordinary 
rent  of  land,  are  altogether  owing  to  the  good  government  of  the 
sovereign,  which,  by  protecting  the  industry  either  of  the  whole 
people,  or  of  the  inhabitants  of  some  particular  place,  enables 
them  to  pay  so  much  more  than  its  real  value  for  the  ground 
which  they  build  their  houses  upon ;  or  to  make  to  its  owner  so 
much  more  than  compensation  for  the  loss  which  he  might  sus- 
tain by  this  use  of  it.  Nothing  can  be  more  reasonable  than 
that  a  fund  which  owes  its  existence  to  the  good  government 
of  the  state  should  be  taxed  peculiarly,  or  should  contribute 
something  more  than  the  greater  part  of  other  funds,  towards 
the  support  of  that  government.^ 

It  will  be  seen  that  in  this  quotation  are  embodied  all  the 
essential  elements  of  the  modern  doctrine  of  the  "single  tax." 
"  Ground  rents  are  a  still  more  proper  subject  of  taxation  than 
the  rent  of  houses."  "A  tax  upon  ground  rents  would  not 
raise  the  rents  of  houses.  It  would  fall  altogether  upon  the 
owner  of  the  ground  rent."  They  are  a  species  of  revenue 
"which  the  owner  in  many  cases  enjoys  without  any  care  or 
attention  of  his  own."  A  discrimination  is  made  between 
ground  rents  and  ordinary  rents,  and  the  superior  fitness  of 


■n 


I 


1  Smith,  Adam,  The  Wealth  of  Nations  (1776),  Book  v,  chap,  n.  Part  I, 
article  i. 


4  The  Principles  of  Natural  Taxation 

the  former  as  a  subject  of  taxation  is  pointed  out:  "The 
ordinary  rent  of  land  is,  in  many  cases,  owing  partly  at  least 
to  the  attention  and  good  management  of  the  landlord.  A! 
very  heavy  tax  might  discourage  too  much  this  attention  and 
good  management."  Finally,  the  true  nature  of  ground  rent 
as  a  social  product,  and  hence  the  perfect  propriety  of  taxing 
it  for  the  benefit  of  the  whole  people,  is  clearly  pointed  out : 
"  Ground  rents,  so  far  as  they  exceed  the  ordinary  rent  of 
land,  are  altogether  owing  to  the  good  government  of  the 

sovereign." 

When  we  consider  that  The  Wealth  of  Nations  appeared  in 
1776  and  that  the  work  of  Henry  George  did  not  appear  till 
about  a  century  later,  it  seems  just  that  advocates  of  natural 
taxation  should  place  on  the  same  scroll  side  by  side  with  the 
name  of  Henry  George  the  name  of  Adam  Smith  as  one  of 
the  founders  of  their  great  reform. 


CHAPTER  II 

John  Stuart  Mill,  1806-1873 

JOHN  STUART  MILL  was  born  in  London  in  1806  and 
^  died  in  Avignon  in  1873.  He  was  educated  by  his  father 
and  as  a  child  displayed  a  most  precocious  intellect.  Beginning 
the  study  of  Greek  at  the  age  of  three,  he  had  read  the  most 
important  works  of  Greek  and  Latin  authors  by  the  time 
he  was  twelve.  He  began  the  systematic  study  of  political 
economy  at  the  age  of  fourteen,  and  his  Essays  on  Political 
Economy,  showing  mature  thought,  were  written  when  he  was 
twenty-four.  The  keen,  intellectual  vigor  which  he  displayed 
as  a  child  he  retained  through  life.  He  wrote  copiously  on 
many  subjects,  and  every  field  which  he  touched  he  illuminated. 
Among  his  best  known  works  are  his  Logic,  Unsettled  QueS" 
tions  of  Political  Economy,  Principles  of  Political  Economy, 
Essays  on  Liberty,  Utilitarianism,  Examination  of  Sir  William 
Hamilton's  Philosophy,  The  Subjection  of  Women.  He  was 
for  many  years  in  the  service  of  the  East  India  House  in 
London,  rising  to  the  position  of  chief  examiner.  He  was 
elected  to  Parliament  in  1865  and  there  championed  the  cause 
of  equal  suffrage  for  women  and  the  taxation  of  the  future 
increment  of  economic  rent. 

In  1873  he  wrote  his  autobiography,  and  from  it  we  catch 
glimpses  of  an  inner  life  no  less  remarkable  than  were  its 
outward  intellectual  manifestations.  He  retained  from  early 
manhood  to  his  death  a  passion  for  justice  and  human  liberty 
and  an  intense  sympathy  for  all  whom  he  considered  oppressed 


is  r: 


mmmm 


!f 


m 


II 


»  The  Principles  of  Natural  Taxation 

by  unwise  laws  or  unjust  social  customs.  He  was  ever  ready 
to  champion  their  cause.  His  sympathies  for  the  laboring 
classes  can  be  read  between  the  lines  of  his  Political  Economy; 
and  for  the  rights  of  women,  in  his  essay  on  the  "  Subjection 
of  Women  "  and  in  his  work  for  equal  suffrage  while  in  parlia- 
ment. The  chief  joy  of  his  life  was  in  the  effort  to  transform 
the  social  order  into  one  in  which  human  nature  might  display 
Itself  on  a  freer  and  happier  plane.  For  his  philosophy  was 
utilitarian,  and  human  happiness  the  aim  and  end. 

Taking  the  theory  of  rent  as  it  came  to  him  from  his  prede- 
cessors. Mill  even  more  than  they  urged  the  necessity  of  taxing 
it  It  was  largely  for  the  purpose  of  pressing  this  reform  that 
he  entered  Parliament.  His  argument  as  given  in  his  Prin- 
ciples of  Political  Economy  (1848),  Book  v,  chap.  11,  sees.  5 
and  6,  for  clear  and  convincing  logic,  has  not  been  surpassed : 

Before  leaving  the  subject  of  Equality  of  Taxation,  I  must 
remark  that  there  are  cases  in  which  exceptions  may  be  made 
to  it,  consistently  with  that  equal  justice  which  is  the  ground- 
work of  the  rule.  Suppose  that  there  is  a  kind  of  income 
which  constantly  tends  to  increase,  without  any  exertion  or  sacri- 
fice on  the  part  of  the  owners :  those  owners  constituting  a  class 
in  the  community,  whom  the  natural  course  of  things  pro- 
gressively enriches,  consistently  with  complete  passiyeness  on 
their  own  part.  In  such  a  case  it  would  be  no  violation  of  the 
principles  on  which  private  property  is  grounded,  if  the  state 
should  appropriate  this  increase  of  wealth,  or  part  of  it,  as  it 
arises.  This  would  not  properly  be  taking  anything  from  any- 
body ;  it  would  merely  be  applying  an  accession  of  wealth,  created 
by  circumstances,  to  the  benefit  of  society,  instead  of  allowing  it 
to  become  an  unearned  appendage  to  the  riches  of  a  particular 

class. 

Now  this  is  actually  the  case  with  rent.  The  ordinary 
progress  of  a  society  which  increases  in  wealth  is  at  all  times 
tending  to  augment  the  incomes  of  landlords ;  to  give  them  both 
a  greater  amount  and  a  greater  proportion  of  the  wealth  of  the 
community,  independently  of  any  trouble  or  outlay  incurred  by 


John  Stuart  Mill,  1806-1873  7 

themselves.  They  grow  richer,  as  it  were  in  their  sleep,  without 
working,  risking,  or  economizing.  What  claim  have  they,  on 
the  general  principle  of  social  justice,  to  this  accession  of  riches  ? 
In  what  would  they  have  been  wronged  if  society  had,  from  the 
beginning,  reserved  the  right  of  taxing  the  spontaneous  increase 
of  rent,  to  the  highest  amount  required  by  financial  exigencies? 
I  admit  that  it  would  be  unjust  to  come  upon  each  individual 
estate,  and  lay  hold  of  the  increase  which  might  be  found  to  have 
taken  place  in  its  rental;  because  there  would  be  no  means  of 
distinguishing  in  individual  cases,  between  an  increase  owing 
solely  to  the  general  circumstances  of  society,  and  one  which 
was  the  effect  of  skill  and  expenditure  on  the  part  of  the  pro- 
prietor. The  only  admissible  mode  of  proceeding  would  be  by  a 
general  measure.  The  first  step  should  be  a  valuation  of  all  the 
land  in  the  country.  The  present  value  of  all  land  should  be 
exempt  from  the  tax;  but  after  an  interval  had  elapsed,  during 
which  society  had  increased  in  population  and  capital,  a  rough 
estimate  might  be  made  of  the  spontaneous  increase  which  had 
accrued  to  rent  since  the  valuation  was  made.  Of  this  the 
average  price  of  produce  would  be  some  criterion;  if  that  had 
risen,  it  would  be  certain  that  rent  had  increased,  and  (as  already 
shown)  even  in  a  greater  ratio  than  the  rise  of  price.  On  this 
and  other  data,  an  approximate  estimate  might  be  made,  how 
much  value  had  been  added  to  the  land  of  the  country  by  nat- 
ural causes ;  and  in  laying  on  a  general  land  tax,  which  for  fear 
of  miscalculation  should  be  considerably  within  the  amount  thus 
indicated,  there  would  be  an  assurance  of  not  touching  any 
increase  of  income  which  might  be  the  result  of  capital  expended 
or  industry  exerted  by  the  proprietor. 

But  though  there  could  be  no  question  as  to  the  justice  of 
taxing  the  increase  of  rent,  if  society  had  avowedly  reserved  the 
right,  has  not  society  waived  that  right,  by  not  exercising  it  ?  In 
England,  for  example,  have  not  all  who  bought  land  for  the  last 
century  or  more,  given  value  not  only  for  the  existing  income, 
but  for  the  prospects  of  increase,  under  an  implied  assurance 
of  being  only  taxed  in  the  same  proportion  with  other  incomes? 
This  objection,  in  so  far  as  valid,  has  a  different  degree  of 
validity  in  different  countries ;  depending  on  the  degree  of  desue- 
tude into  which  society  has  allowed  a  right  to  fall,  which,  no  one 
can  doubt,  it  once  fully  possessed.  In  countries  of  Europe,  the 
right  to  take  by  taxation,  as  exigency  might  require,  an  indefinite 
portion  of  the  rent  of  land,  has  never  been  allowed  to  slumber. 


Pt 


S  The  Principles  of  Natural  Taxation 

In  several  parts  of  the  Continent  the  land  tax  forms  a  large 
proportion  of  the  public  revenues,  and  has  always  been  con- 
fessedly liable  to  be  raised  or  lowered  without  reference  to  other 
taxes.  In  these  countries  no  one  can  pretend  to  have  become 
the  owner  of  land  on  the  faith  of  never  being  called  upon  to  pay 
an  increased  land  tax.  In  England  the  land  tax  has  not  varied 
since  the  early  part  of  the  last  century.  The  last  act  of  the  Legis- 
lature in  relation  to  its  amount  was  to  diminish  it;  and  though 
the  subsequent  increase  in  the  rental  of  the  country  has  been 
immense,  not  only  from  agriculture,  but  from  the  growth  of 
towns  and  the  increase  of  buildings,  the  ascendancy  of  land- 
holders in  the  legislature  has  prevented  any  tax  from  being 
imposed,  as  it  so  justly  might  have  been,  upon  the  very  large 
portion  of  this  increase  which  was  unearned,  and,  as  it  were, 
accidental.  For  the  expectations  thus  raised,  it  appears  to  me 
that  an  amply  sufficient  allowance  is  made,  if  the  whole  increase 
of  income  which  has  accrued  during  this  long  period  from  a 
mere  natural  law,  without  exertion  or  sacrifice,  is  held  sacred 
from  any  peculiar  taxation.  From  the  present  date,  or  any  sub- 
sequent time  at  which  the  legislature  may  think  fit  to  assert 
the  principle,  I  see  no  objection  to  declaring  that  the  future 
increment  of  rent  should  be  liable  to  special  taxation ;  in  doing 
which  all  injustice  to  the  landlords  would  be  obviated,  if  the 
present  market-price  of  their  land  were  secured  to  them,  since 
that  includes  the  present  value  of  all  future  expectations.  With 
reference  to  such  a  tax,  perhaps  a  safer  criterion  than  either  a 
rise  of  rents  or  a  rise  of  the  price  of  com  would  be  a  general 
rise  in  the  price  of  land.  It  would  be  easy  to  keep  the  tax 
within  the  amount  which  would  reduce  the  market-value  of  land 
below  the  original  valuation:  and  up  to  that  point,  whatever 
the  amount  of  the  tax  might  be,  no  injustice  would  be  done  to 
the  proprietors. 

6.  But  whatever  may  be  thought  of  the  legitimacy  of  mak- 
ing the  State  a  sharer  in  all  future  increase  of  rent  from  natural 
causes,  the  existing  land  tax  (which  in  this  country  unfortunately 
is  very  small)  ought  not  to  be  regarded  as  a  tax,  but  as  a  rent- 
charge  in  favor  of  the  public;  a  portion  of  the  rent,  reserved 
from  the  beginning  by  the  State,  which  has  never  belonged  to 
or  formed  part  of  the  income  of  the  landlords,  and  should  not 
therefore  be  counted  to  them  as  part  of  their  taxation,  so  as  to 
exempt  them  from  their  fair  share  of  every  other  tax.  As  well 
might  the  tithe  be  regarded  as  a  tax  on  the  landlords:  as  well. 


John  Stuart  MiU,  1806-1873  ^. 

in  Bengal,  where  the  State,  though  entitled  to  the  whole  rent 
of  the  land,  gave  away  one-tenth  of  it  to  individuals,  retaining 
the  other  nine-tenths,  might  those  nine-tenths  be  considered  as  an 
unequal  and  unjust  tax  on  the  grantees  of  the  tenth.  That  a 
person  owns  part  of  the  rent  does  not  make  the  rest  of  it  his 
just  right,  injuriously  withheld  from  him.  The  landlords  orig- 
inally held  their  estates  subject  to  feudal  burdens,  for  which  the 
present  land-tax  is  an  exceedingly  small  equivalent,  and  for  their 
relief  from  which  they  should  have  been  required  to  pay  a  much 
higher  price.  All  who  have  bought  land  since  the  tax  existed 
have  bought  it  subject  to  the  tax.  There  is  not  the  smallest 
pretence  for  looking  upon  it  as  a  payment  exacted  from  the  exist- 
ing race  of  landlords. 

The  legislative  program  by  which  Mill  sought  to  realize 
the  principles  laid  down  in  the  above  quotation  may  be  foimd 
in  a  pamphlet  which  he  prepared  for  the  Land  Tenure  Reform 
Association  for  the  popularization  of  these  ideas.  "  It  is  pro- 
posed," we  read  (sec.  4)  : 

To  claim  for  the  benefit  of  the  state  the  interception  by  taxa- 
tion of  the  future  unearned  increase  of  the  rent  of  land  (so  far 
as  the  same  can  be  ascertained)  or  a  great  part  of  that  increase, 
which  is  continually  taking  place  without  any  effort  or  outlay  by 
the  proprietors  merely  through  the  growth  of  population  and 
wealth;  reserving  to  owners  the  option  of  relinquishing  their 
property  to  the  state  at  the  market  value  which  it  may  have 
acquired  at  the  time  when  this  principle  may  be  adopted  by  the 
legislature. 

In  explaining  and  defending  the  program  of  the  Associa- 
tion, he  argues  that — 

in  allowing  the  land  to  become  private  property,  the  state  ought 
to  have  reserved  to  itself  this  accession  of  income,  and  that  lapse 
of  time  does  not  extinguish  this  right,  whatever  claim  to  com- 
pensation it  may  establish  in  favor  of  the  landowner.  The  land 
is  the  original  inheritance  of  mankind.  The  usual,  and  by  far 
the  best  argument  for  its  appropriation  by  individuals  is  that 
private  ownership  gives  the  strongest  motive  for  making  the 
soil  yield  the  greatest  possible  produce.     But  this  argument  is 


h   ». 


iH 


10  The  Principles  of  Natural  Taxation 


I 


only  valid  for  leaving  to  the  owner  the  full  enjoyment  of  what- 
ever value  he  adds  to  the  land  by  his  own  exertions  and  expendi- 
ture. There  is  no  similar  reason  for  allowing  him  to  appropriate 
an  increase  of  value  to  which  he  has  contributed  nothing,  but 
which  accrues  to  him  from  the  general  growth  of  society;  that 
is  to  say,  not  from  his  own  labor  and  expenditure,  but  from 
that  of  other  people  —  of  the  community  at  large. 

From  the  foregoing  quotations  it  is  clear  that  Mill  recog- 
nizes the  principle  that  land  is  the  original  inheritance  of 
mankind,  that  is,  the  principle  of  the  equal  right  to  land.  But 
he  does  not  emphasize  this  point  as  a  reason  for  the  taxation 
of  economic  rent.  Rather,  he  finds  the  justification  of  its 
appropriation  by  the  state  in  the  fact  that  it  is  an  income  due, 
not  to  labor  and  investment  on  the  part  of  the  landlord,  but 
to  the  general  social  growth  in  population  and  wealth.  He, 
however,  recognizes  the  force  of  the  "vested  rights"  argu- 
ment. It  would  have  been  entirely  consonant  with  justice  had 
the  state  appropriated  this  entire  " unearned  increment"  from 
the  start.  Private  ownership  should  only  have  been  permitted 
on  these  terms.  But  this  was  not  done.  Men  had  become 
landed  proprietors  with  the  understanding  that  the  rent  of 
their  lands  was  to  be  their  private  income.  This  income  had 
increased,  and  transfers  of  investments  and  real  estate  had 
been  made  in  good  faith  on  the  strength  of  this  increase  up  to 
the  present  time.  Very  well,  let  bygones  be  bygones.  But 
for  the  future  let  no  such  unearned  increment  be  allowed. 
Moreover,  the  state  is  to  reserve  from  private  ownership  such 
lands  as  are  still  at  its  disposal. 

From  the  nature  of  this  very  conservative  proposal  it  is 
evident  that  the  revenue  from  economic  rent  could  not,  in  his 
opinion,  be  a  "single"  tax  —  it  would  be  insufficient.  It  was 
to  be  only  a  part  of  a  general  system  of  taxation  whose  merits 
are  discussed  in  other  chapters  of  his  book. 


•1 


h 

ii 
t. 


CHAPTER  III 
Patrick  Edward  Dove,  1815-1873 

PATRICK  EDWARD  DOVE  was  born  in  Lasswade, 
near  Edinburgh,  Scotland,  July  31,  1815.  He  came  of 
an  old  and  distinguished  Scottish  family.  As  a  young  man  he 
traveled  widely,  and  lived  for  a  time  in  Paris  and  in  London. 
About  1840  he  came  into  the  family  property  in  Ayrshire, 
Scotland.  There  he  lived  on  his  estate  the  life  of  a  bachelor 
squire  until  1848,  when  an  unfortunate  investment  wiped  out 
his  fortune.  Shortly  after  this  he  married  and  went  to  live 
in  Darmstadt,  Germany,  where  he  studied,  wrote,  and  lectured. 
In  1850  he  published  his  Theory  of  Human  Progression.  The 
work  appeared  in  a  limited  edition  published  simultaneously 
in  London  and  Edinburgh.  It  was  read  and  praised  by  distin- 
guished scholars,  but  never  attracted  general  public  attention. 
In  his  introduction  to  the  edition  of  the  book  brought  out  in 
1895  i^  New  York,  Mr.  Alexander  Harvey  states: 

Carlyle  read  and  praised  the  volume.  He  is  quoted  as  acclaim- 
ing it  the  voice  of  a  new  revolution,  an  education  in  economics. 
Sir  William  Hamilton,  the  great  philosopher,  pronounced  the 
book  epoch-making,  and  calculated  to  rally  mankind  to  great 
reforms.  Professor  Blackie  likewise  praised  it  highly.  Our  own 
Charles  Sumner  was  so  impressed  by  it  that  he  circulated  many 
copies  in  the  United  States  and  persuaded  Dove  to  write  in 
behalf  of  the  emancipation  movement. 

For  all  that  the  book  failed  to  make  its  way  and  before 
many  years  was  utterly  forgotten.  It  became  very  scarce  in 
time,  and  the  demand  for  it  on  the  part  of  a  few  scholars  was 
supplied  with  difficulty.  What  Dove  did  for  scholars,  George 
achieved  for  the  masses. 


i 


i 


12  The  Principles  of  Natural  Taxation 

After  publishing  his  book,  Dove  left  Germany  and  lived  in 
Edinburgh  for  a  time,  later  in  Glasgow.  He  wrote  somewhat 
extensively  on  economic,  philosophic,  and  religious  subjects. 
In  his  later  years  he  interested  himself  actively  in  military 
science.  In  i860  he  was  stricken  with  paralysis.  He  traveled 
to  Natal  in  a  vain  search  for  health.  He  returned  to  Glasgow, 
where  he  spent  his  last  years  in  retirement,  dying  April  28,  1873. 

The  Theory  of  Human  Progression^  is  a  somewhat  ambi- 
tious contribution  to  the  science  of  politics.  It  was  the  author's 
aim  to  formulate  the  principles  by  which  the  relations  between 
man  and  man  ought  to  be  regulated.  The  work  shows  a  pecul- 
iar mixture  of  intellectual  characteristics.  There  runs  through 
it  a  vein  of  naive  piety  side  by  side  with  a  lode  of  free  think- 
ing. The  style  is  marked  by  prolixity  and  repetition,  but  in 
certain  passages  reaches  heights  of  vigorous  eloquence. 

His  treatment  of  the  land  question,  to  which  he  naturally 
gave  large  attention,  also  exhibits  the  effects  of  eighteenth- 
century  teaching.  He  remarks  that  "the  land  produces, 
according  to  the  law  of  the  Creator,  more  than  the  value  of 
the  labor  expended  on  it,  and  on  this  account  men  are  willing 
to  pay  a  rent  for  land."  This  is  the  old  delusion  of  a  magic 
property  in  the  soil  which  throws  off  a  "  net  product,"  and  thus 
gives  rise  to  economic  rent.  Again,  in  another  passage,  he 
speaks  of  rent  as  "the  profit  that  God  had  graciously  been 
pleased  to  accord  to  human  industry  employed  in  the  cultiva- 

*  Miss  Julia  Kellogg  has  left  an  abridgment  of  Dove's  work  worthy  the 
gratitude  of  land  reformers  the  world  over.  Within  this  volume  of  scarce 
150  pages,  little  more  than  one-third  the  compass  of  the  original  work,  may 
be  found  in  clear  relief  all  of  Dove's  essential  principles  and  philosophy, 
for  which  Miss  Kellogg  with  her  profound  understanding  and  the  ripeness 
of  four  score  years  had  keen  appreciation.  She  was  proud  to  have  attained 
her  object  by  process  of  elimination,  and  without  a  single  alteration  of  her 
author's  wording.  Both  the  book  and  author  have  compelled  golden  opin- 
ions.    (Published  by  Isaac  H.  Blanchard  &  Co.,  New  York.) 


I# 


Patrick  Edward  Dove,  1815-1873 


13 


tion  of  the  soil."    Dove  had,  in  fact,  little  comprehension  of 
the  nature  of  ground  rent  as  essentially  a  social  product. 

Dove's  discussion  of  the  land  question,  which  is  outlined 
in  our  extracts  from  his  book,  might  be  summed  up  in  three 
propositions,  as  follows:  (i)  The  land  is  a  free  gift  of  the 
Creator  to  all  men,  and,  as  such,  should  be  common,  not  pri- 
vate property;  (2)  It  is  not  practicable,  however,  to  enforce 
this  right  of  common  property  by  dividing  the  land  into  equal 
shares  and  apportioning  it  among  the  inhabitants  according  to 
their  number;  (3)  The  solution  of  the  problem  lies  in  the 
taxation  of  rent,  or  common  appropriation  of  the  annual  value 
of  the  land. 


m 


jf 


Extracts  from  "The  Theory  of  Human  Progression 

( 1 )  Arraignment  of  existing  land  laws. — 

Under  the  present  system  of  land  occupancy,  combined  with 
labor  taxation,  want  and  starvation  are  the  natural  consequences. 
They  may  excite  compassion,  but  they  need  excite  no  wonder. 
And  until  the  present  system  is  broken  up,  root  and  branch,  and 
buried  in  oblivion,  the  laboring  population  of  Britain  and  Ireland 
must  reap  the  fruits  of  a  system  that  first  allocates  all  the  soil  to 
thirty  or  forty  thousand  proprietors,  and  then  places  the  heaviest 
taxation  in  the  world  on  the  mass  of  inhabitants.  —  Chap,  iii, 
p.  244. 

(2)  Right  of  the  nation  to  change  the  land  laws. — 

There  is  no  such  thing  as  "  the  rights  of  landed  property " 
separated  from  the  mere  dictum  of  the  law,  which  the  nation 
has  an  undoubted  right  to  alter  or  abolish  whenever  it  shall  see 
fit  to  do  so.  And  if  the  nation  were  to  resolve  to  resume  and 
take  back  all  lands  which  had  been  granted  by  the  crown  (with 
considerations  affecting  those  individuals  who  had  purchased), 
the  nation  would  not  be  guilty  of  any  crime,  or  wrong,  or  im- 
propriety; but  would  be  exactly  in  the-  same  position  as  it  is 
when  it  abolishes  laws  against  witchcraft,  or  laws  in  favor  of  the 
slave  trade,  or  laws  which  make  it  a  legal  crime  to  be  a  Jew  or 
a  Catholic. 


14  The  Principles  of  Natural  Taxation 

Superstition,  on  this  point,  may  endure  for  a  few  years 
longer ;  but  no  truth  can  be  more  certain  than  that  God  gave  the 
land  for  the  benefit  of  all;  and  if  any  arrangement  interfere 
with,  or  diminish  that  benefit,  then  has  man  as  man,  as  the 
recipient  of  God's  bounty,  an  undoubted  right  to  alter  or  abolish 
that  arrangement,  exactly  as  he  alters  his  arrangements  in  agri- 
culture, in  medicine,  in  mechanics,  or  in  navigation.  No  more 
crime,  and  no  more  wrong  attaches  to  his  alterations  in  the  one 
case  than  in  the  other.  —Chap,  iii,  pp.  275-76. 

(3)  Problem  of  the  equitable  disposition  of  the  earth. — 

Is  it  equitable  that  any  arrangements  of  past  generations 
should  cause  one  man  now  to  be  born  heir  to  a  county,  or  half  a 
county,  or  quarter  of  a  county,  while  the  other  inhabitants  of 
that  county  are  thereby  deprived  of  all  right  to  the  soil,  and 
must  consequently  pay  a  rent  to  the  one  individual  who  naturally 
has  not  one  particle  of  right  to  the  earth  more  than  they  have 
themselves?  And  if  such  an  arrangement  be  not  now  equitable, 
most  undoubtedly  it  ought  not  to  be  allowed  to  continue ;  and  if 
any  government  (instead  of  administrating  the  laws  of  equity) 
use  the  armed  power  of  the  nation  for  the  purpose  of  enforcing 
such  arrangements,  such  government  has  departed  from  its 
proper  intention,  and  is  not  entitled  to  obedience. 

If,  then,  we  admit  that  every  generation  of  men  has  exactly 
the  same  free  right  to  the  earth,  unencumbered  by  any  arrange- 
ments of  past  ages,  the  great  problem  is  to  discover  "such  a 
system  as  shall  secure  to  every  man  his  exact  share  of  the 
natural  advantages  which  the  Creator  has  provided  for  the  race ; 
while  at  the  same  time,  he  has  full  opportunity,  without  let  or 
hindrance,  to  exercise  his  labor,  industry,  and  skill,  for  his  own 
advantage."  Until  this  problem  is  solved,  both  in  theory  and  in 
practice,  political  change  must  continually  go  on.  —  Chap,  iii, 

p.  303- 

(4)   The  answer  to  the  land  question, — 

The  solution  we  propound  (and  which  we  hope  to  defend 
more  at  large  at  some  future  period)  is  the  following,  although, 
of  course,  there  is  no  supposition  that  any  general  solution  can 
be  immediately  applicable  to  the  circumstances  of  this  or  any 
other  country. 


Patrick  Edward  Dove,  1815-1873 


15 


1st.  Reason  can  acknowledge  no  difference  of  original 
rights  between  the  individuals  of  which  the  human  race  is  com- 
posed. 

2nd.  Equality  of  rights  cannot  be  sacrificed  by  any  arrange- 
ments which  one  generation  of  men  make  for  succeeding  genera- 
tions; but  equality  of  rights  is  perpetual,  inasmuch  as  that 
equality  derives  from  the  human  reason,  which  varies  not  from 
age  to  age.  . 

Even  if  it  were  true  that  there  ought  to  be  an  mequahty  of 
rights  among  the  individuals  of  the  human  race,  it  would  be 
absolutely  impossible  to  determine  which  individuals  of  the  race 
should  be  born  to  more  rights,  and  which  individuals  to  fewer 
rights,  than  their  fellows.  An  inequality  of  rights  can  only  be 
based  on  superstition,  and  the  very  moment  reason  is  substituted 
for  superstition  in  political  science  (as  it  has  been  in  physical 
science),  that  moment  must  men  admit  that  no  possible  means  are 
known  by  which  an  inequality  of  rights  could  possibly  be  substan- 
tiated. Even  if  it  were  true,  for  instance,  that  there  should  be  an 
aristocracy  and  a  serfdom,  there  are  no  possible  means  of  deter- 
mining which  individuals  should  be  the  aristocrats  and  which 
individuals  the  serfs. 

3rd.  The  state  of  England,  then,  would  present  a  soil  (in- 
cluding the  soil  proper,  the  mines,  forests,  fisheries,  etc.  —  in 
fact,  that  portion  of  the  natural  earth  called  England)  which 
was  permanent,  and  a  population  that  was  not  permanent,  but 
renewed  by  successive  generations. 

4th.  The  question  then  is,  "  What  system  will  secure  to  every 
individual  of  these  successive  generations  his  portion  of  the  natu- 
ral advantages  of  England?"  Of  this  problem,  we  maintain  that 
there  is  but  one  solution  possible. 

5th.  No  truth  can  be  more  absolutely  certain  as  an  intuitive 
proposition  of  the  reason,  than  that  "  an  object  is  the  property 
of  its  creator";  and  we  maintain  that  creation  is  the  only  means 
by  which  an  individual  right  to  property  can  be  generated.  Con- 
sequently, as  no  individual  and  no  generation  is  the  creator  of 
the  substantive,  earth,  it  belongs  equally  to  all  the  existing 
inhabitants.    That  is,  no  individual  has  a  special  claim  to  more 

than  another.  .  -j       • 

6th.  But  while  on  the  one  hand  we  take  mto  consideration 
the  object  — that  is,  the  earth;  we  must  also  take  into  con- 
sideration the  subject  —  that  is,  man,  and  man's  labor. 


16  The  Principles  of  Natural  Taxation 

7th.  The  object  is  the  common  property  of  all;  no  indi- 
vidual being  able  to  exhibit  a  title  to  any  particular  portion  of  it. 
And  individual  or  private  property  is  the  increased  value  pro- 
duced by  individual  labor.  Again,  in  the  earth  must  be  distin- 
guished the  permanent  earth  and  its  temporary  or  perishable 
productions.  The  former — that  is,  the  permanent  earth  —  we 
maintain,  never  can  be  private  property ;  and  every  system  that 
treats  it  as  such  must  necessarily  be  unjust.  No  rational  basis 
has  ever  been  exhibited  to  the  world  on  which  private  right  to 
any  particular  portion  of  the  earth  could  possibly  be  founded. 

8th.  But  though  the  permanent  earth  never  can  be  private 
property  (although  the  laws  may  call  it  so,  and  may  treat  it  as 
such),  it  must  be  possessed  by  individuals  for  the  purpose  of 
cultivation,  and  for  the  purpose  of  extracting  from  it  all  those 
natural  objects  which  man  requires. 

9th.  The  question  then  is,  upon  what  terms,  or  according  to 
what  system,  must  the  earth  be  possessed  by  the  successive 
generations  that  succeed  each  other  on  the  surface  of  the  globe? 
The  conditions  given  are  — First,  That  the  earth  is  the  common 
property  of  the  race ;  Second,  That  whatever  an  individual  pro- 
duces by  his  own  labor  (whether  it  be  a  new  object,  made  out 
of  many  materials,  or  a  new  value  given  by  labor  to  an  object 
whose  form,  locality,  etc.,  may  be  changed)  is  the  private  prop- 
erty of  that  individual,  and  he  may  dispose  of  it  as  he  pleases, 
provided  he  does  not  interfere  with  his  fellows.  Third,  The 
earth  is  the  perpetual  common  property  of  the  race,  and  each 
succeeding  generation  has  a  full  title  to  a  free  earth.  One 
generation  cannot  encumber  a  succeeding  generation. 

And  the  condition  required  is,  such  a  system  as  shall  secure 
to  the  successive  individuals  of  the  race  their  share  of  the  common 
property,  and  the  opportunity,  without  interference,  of  making 
as  much  private  property  as  their  skill,  industry,  and  enterprise 
would  enable  them  to  make. 

The  scheme  that  appears  to  present  itself  most  naturally  is, 
the  general  division  of  the  soil,  portioning  it  out  to  the  inhabit- 
ants according  to  their  number.  Such  appears  to  be  the  only 
system  that  suggests  itself  to  most  minds,  if  we  may  judge  from 
the  objections  brought  forward  against  an  equalization  of  prop- 
erty All  these  objections  are  against  the  actual  division  of  the 
soil;  and  certainly  such  a  division  is  theoretically  erroneous, 
especially  when  the  fractional  parts  are  made  the  property  of  the 


Patrick  Edward  Dove,  1815-1873 


17 


possessors.  But  independently  of  this,  the  profits  arising  from 
trade,  etc.,  would  induce  many  individuals  to  forsake  agricul- 
ture, and  to  abandon  their  portion  to  those  who  preferred  the 
cultivation  of  the  soil  to  any  other  pursuit.  A  purely  agricultural 
population  is  almost  impossible  at  any  period;  but  when  men 
have  made  considerable  advances  in  the  arts,  etc.,  a  general 
return  to  agricultural  pursuits  is  a  mere  chimera,  a  phantom. 
Men  must  go  forward,  never  backward.  To  speak  of  a  division 
of  lands  in  England  is  absurd.  Such  a  division  would  be  as 
useless  as  it  is  improbable.  But  it  is  more  than  useless  —  it  is 
unjust;  and  unjust,  not  to  the  present  so-called  proprietors,  but 
to  the  human  beings  who  are  continually  being  born  into  the 
world,  and  who  have  exactly  the  same  natural  right  to  a  portion 
that  their  predecessors  have  had 

The  actual  division  of  the  soil  need  never  be  anticipated,  nor 
would  such  a  division  be  just,  if  the  divided  portions  were  made 
the  property  (legally,  for  they  could  never  be  so  morally)  of 
individuals.  . 

If,  then,  successive  generations  of  men  cannot  have  their 
fractional  share  of  the  actual  soil  (including  mines,  etc.),  how 
can  the   division   of  the  advantages  of   the   natural  earth  be 

effected  ? 

By  the  division  of  its  annual  value  or  rent;  that  is,  by 
making  the  rent  of  the  soil  the  common  property  of  the  nation. 
That  is  (as  the  taxation  is  the  common  property  of  the  state), 
by  taking  the  whole  of  the  taxes  out  of  the  rents  of  the  soil,  and 
thereby  abolishing  all  other  kinds  of  taxation  whatever.  And 
thus  all  industry  could  be  absolutely  emancipated  from  every 
burden,  and  every  man  would  reap  such  natural  reward  as  his 
skill,  industry,  or  enterprise  rendered  legitimately  his,  according 
to  the  natural  law  of  free  competition.  This  we  maintain  to  be 
the  only  theory  that  will  satisfy  the  requirements  of  the  problem 

of  natural  property We  have  no  hesitation  whatever  in 

predicting  that  all  civilized  communities  must  ultimately  abolish 
all  revenue  restrictions  on  industry,  and  draw  the  whole  taxation 
from  the  rents  of  the  soil.  And  this  because  ....  the  rents  of 
the  soil  are  the  common  produce  of  the  whole  labor  of  a 
community.  — Chap,  iii,  pp.  305-31  !• 


i*  i 

'1 


CHAPTER  IV 

Edwin  Burgess,  1807-1869 

IN  1859  and  i860  Edwin  Burgess  published  in  the  Racine 
Advocate,  of  Racine,  Wisconsin,  a  series  of  letters  on  taxa- 
tion in  which  he  advocated  a  single  tax  on  land.  Mr.  Burgess, 
who  was  born  in  London,  settled  at  Racine  during  the  forties 
and  established  a  successful  business  as  merchant  tailor.  By 
those  who  knew  him  he  is  described  as  "a  man  of  liberal 
ideas  in  politics  and  religion,"  kindly  and  moderate,  and 
"thoughtful  in  all  things."  He  revisited  England  in  1864, 
taking  with  him  an  edition  of  his  letters.  Some  time  after 
his  death,  which  occurred  in  1869,  his  wife  returned  to  Eng- 
land and  printed  them  in  pamphlet  form  for  distribution  among 
friends.  Subsequently  the  letters  seem  to  have  been  lost  sight 
of,  until  in  1908  they  were  reprinted  at  Auckland,  New  Zea- 
land, in  the  Liberator,  the  well-known  single-tax  organ.  In 
1 91 2,  William  S.  Buff  ham  and  Hyland  Raymond,  old  friends 
of  Mr.  Burgess,  again  reprinted  the  pamphlet  in  Racine,  where 
the  letters  were  originally  published. 

The  first  letter  describes  as  follows  the  evils  of  attempting 
to  tax  personal  property : 

1st.  Taxing  people  for  their  personal  property  — on  their 
oath,  is  a  premium  on  perjury,  because  those  who  lie  the  most, 
pay  the  least  taxes,  and  children  born  under  such  influences  will 
be  famous  for  lying — if  there  is  any  connection  between  cause 
and  effect  in  the  condition  of  parent  and  offspring. 

2nd.  The  means  of  valuing  or  assessing  are  very  expensive, 
thus  increasing  the  cost  of  government,  as  well  as  the  cost  of 
corruption. 

18 


EDWIN  BURGESS 
1807-1869 


Edwin  Burgess,  1807-1869 


19 


W 


3rd.  Taxing  personal  property  prevents  production,  because 
the  tax,  being  added  to  the  article  for  sale,  increases  its  price 
in  proportion  to  the  means  of  buying.  Hence,  less  is  sold  and 
less  is  made,  and  the  makers  are  less  employed;  and  having, 
consequently,  less  with  which  to  buy,  the  makers  of  other 
things  will  be  less  employed  also  —  and  suffer  much  misery  in 
consequence 

4th.  Taxing  personal  property  is  not  only  costly,  corruptive, 
and  pauper-making,  and  promotive  of  misery  and  crime,  but 
inquisitorial,  burdensome,  and  aggressive  against  our  right  to 
labor  and  enjoy  the  fruit  of  our  toil  unmolested ;  as  long  as  we 
injure  no  one,  we  should  be  protected  against  aggression,  instead 
of  suffering  aggression.  Are  we  not  now  taxed  for  the  aggres- 
sion instead  of  the  protection  against  it? 

5th.  Taxing  people  in  proportion  to  their  industry  prevents 
industry;  because  when  an  industrious  person  labors  twelve 
hours  per  day,  successfully,  he  must  pay  twelve  times  as  much 
taxes,  because  he  has  made  twelve  times  as  much  property  to 
be  taxed,  as  if  he  had  worked  only  one  hour  per  day 

The  second  letter  enlarges  on  the  evils  of  taxing  personal 
property;  the  third,  fourth,  and  fifth  call  attention  to  various 
anomalies  in  the  laws  relating  to  that  subject  or  in  the  adminis- 
tration of  them.    The  third  letter  concludes  as  follows : 

We  exempt  railroad  property  from  local  taxes,  and  gas  prop- 
erty, and  schools,  churches,  and  banks ;  now,  if  it  is  good  in  one 
case,  I  challenge  anyone  to  show  that  it  is  not  good  in  all.  Then 
away  with  your  paltry  special  privilege  legislating,  and  let  us 
have,  instead,  laws  which,  if  universally  applied,  would  cause 
the  most  permanent  prosperity  for  all ;  and  though  we  can  never 
do  good  to  the  taxpayer  by  taxing  him,  let  us  be  sure  that  we  do 
him  the  least  possible  injury ;  and  that,  I  contend,  the  "  ad  valo- 
rem" land  tax  will  do,  and  no  other  forced  tax  whatever,  for 
it  is  less  costly  in  valuation  and  collection,  less  corruptive  and 
unequal,  and  causes  less  pauperism,  misery,  and  crime  than  any 
other  tax ;  in  fact,  it  is  the  only  Free  Trade  Tax,  and  sets  up  no 
board  of  inquisition  on  the  industry  of  any  man  or  woman. 

The  sixth  letter  considers  federal  taxation,  and  maintains 
that  neither  customs  duties  nor  "any  tax  on  any  product  of 


20  The  Principles  of  Natural  Taxation 

industry "  can  bring  about  an  equal  distribution  of  burdens. 
The  seventh  contains  the  following  significant  paragraphs : 

To  illustrate  the  relative  merits  of  the  tariff  and  the  land  tax, 
let  us  suppose,  for  example,  that  Racine  exempted  all  merchants 
and  manufacturers'  goods  from  taxes,  and  all  grain,  farm  prod- 
uce, etc.,  and  all  people  from  poll  tax  and  all  improvements  from 
taxes,  and  put  all  the  taxes  on  the  land ;  and  at  the  same  time 
Milwaukee  and  Kenosha  exempted  all  land  from  taxes,  and  put 
all  the  taxes  on  the  farm  produce  and  merchants'  and  manufac- 
turers' goods  and  improvements  and  poll  tax,  in  fact,  on  all 
articles  which  are  exempt  from  taxes  in  Racine ;  where  would 
the  mechanics,  merchants,  and  manufacturers  settle?  If  all  other 
advantages  were  equal,  evidently  where  the  goods  were  untaxed, 
because  it  would  cost  less  to  commence  and  carry  on  manufac- 
tories, and  they  could  sell  goods  better  also  where  no  special  tax 
raised  the  price  of  the  article.  Where  would  the  farmers  go  to 
sell  their  produce  and  buy  their  goods  ?  Doubtless  where  neither 
was  taxed,  because  there  they  would  obtain  the  most  money  for 
their  produce,  and  the  most  goods  for  their  money.  Would  not 
Racine  grow  rapidly  while  Milwaukee  and  Kenosha  dwindled? 
And  will  not  this  be  true  of  any  city,  town,  county,  state,  or 

iiation?  ^    „,.„  .  ,.       i_ 

But  where  will  the  land  speculators  go?  Will  it  not  be  where 
the  land  is  untaxed?  because  there  it  will  sell  for  the  highest 
price,  while  it  costs  nothing  to  keep  the  land  idle  and  the  man 
idle ;  there  the  land  monopolist  might  flourish,  but  there  it  would 
be  more  difficult  to  commence  farming,  because  the  land  will  be 
higher,  and  manufacturing  also,  not  only  because  the  land  for 
the  factory  will  cost  much  more,  but  because  of  the  high  special 
tax  on  the  raw  material,  and  every  implement  for  manufacturing 
it  And  where  the  land  is  untaxed,  the  land  being  higher,  the 
rents  will  be  higher  also,  and  it  will  be  doubly  difficult  for  the 
landless  mechanic  to  buy  a  lot  for  his  house,  and  his  rent  will 
be  high  in  proportion  as  the  land  is  high ;  and  the  high  price 
and  high  rents,  instead  of  defraying  the  expenses  of  government 
(as  the  land  tax  would  do),  go  to  enrich  the  land  monopolist  at 
the  cost  of  every  landless  consumer ;  and  by  making  and  keeping 
people  landless  and  dependent  on  the  monopohst  for  employ- 
ment, and  thus  making  the  means  of  living  the  most  uncertain, 
promote  misery,  pauperism,  and  crime,  and  thus  vastly  increase 


Edwin  Burgess,  1807-1869 


21 


the  cost  of  government  by  increasing  the  taxes  for  the  prevention 
of  crime  and  the  support  of  paupers,  criminals,  and  their  officers. 
The  land  tax,  unlike  the  tariff,  would  require  no  extra  officers 
for  assessing  and  collecting  revenue  for  the  general  government, 
as  the  expenses  would  be  defrayed  by  a  percentage  on  the  assess- 
ment for  State  purposes,  which  would  be  transmitted  to  the 
general  government  in  the  best  manner. 

The  eighth  and  ninth  letters  show  the  advantages  of 
placing  "all  the  taxes  on  the  land  alone,  irrespective  of  all 
improvements."    Mr.  Burgess  says: 

Now,  I  think  I  can  show  a  much  clearer  case  with  the  land 
tax  for  revenue  than  any  remunerative  or  protective  tariff  what- 
ever ;  for,  while  all  the  taxes  are  on  the  land,  not  only  does  the 
land  tax  defray  all  the  cost  of  government,  and  diminish  the  cost 
of  government,  but  the  land  sells  for  the  lowest  price  also, 
instead  of  the  highest,  thus  keeping  the  land  within  the  means 
of  all,  or  at  least  the  great  majority  of  the  people;  so  that  we 
can  have  the  greatest  number  of  land-owning  producers  of  food, 
who  having  no  rent  to  pay,  can  supply  us  with  cheaper  food 
minus  the  rent,  or  divide  what  was  hitherto  paid  in  rent  between 
the  producer  and  the  consumer.  And  with  land  at  the  lowest 
price,  rents  would  be  the  lowest  also,  and  ultimately  cease,  so 
that  the  rent  hitherto  paid  by  mechanics,  laborers,  merchants,  and 
manufacturers,  would  then  be  divided  between  the  maker,  the 
seller,  and  the  consumer. 

For,  with  all  the  taxes  on  the  land,  it  would  not  pay  to  keep 
it  idle;  therefore  speculation  in  land  would  soon  cease  and  be 
transferred  to  untaxed  manufactures  or  labor,  which  would  in- 
crease the  demand  and  raise  the  wages  of  labor  and  reduce  the 
profits  of  capital  and  speculation;  and  at  the  same  time  we 
should  create  and  sustain  the  most  permanent  and  profitable 
home  market  for  produce  and  manufactures,  and  settle  forever 
that  oft-mooted  question  of  political  economists,  how  to  realize 
the  utmost  economy  in  the  production  and  distribution  of  wealth ; 
and  in  this  way  it  could  be  done  with  the  least  possible  cost  of 
government,  and  with  the  protection  of  free  commerce  and  free 
land  instead  of  the  violation  of  both. 

Then,  when  food  becomes  cheap  in  the  country,  from  cheap 
land  and  no  tax  on  improvements,  mechanics,  manufacturers,  and 


22  The  Principles  of  Natural  Taxation 

merchants  can  go  where  food  is  cheapest  whenever  it  will  pay 
better  than  having  the  food  transported  to  them,  as  they  will 
then  have  the  increased  means,  which  were  hitherto  paid  in  rents, 
with  which  to  travel.  And  when  farmers  desire  to  settle  near 
factories  for  the  benefit  of  market  and  exchange,  they  may  be 
sure  the  land  will  never  be  high,  nor  manufactures,  either ;  be- 
cause the  tax  is  on  the  land,  and  not  on  the  manufactures. 

Edwin  Burgess'  pamphlet,  like  so  many  other  fugitive  pub- 
lications of  merit,  seems  to  have  produced  no  effects  at  the 
time,  and  probably  was  soon  forgotten  by  all  except  a  few  of 
the  author's  friends.  Despite  faults  of  style  and  occasional 
vagaries  of  opinion,  the  pamphlet  exhibits  in  the  strongest 
light  the  evils  that  result  from  the  taxation  of  products  of 
human  labor,  and  anticipates  the  main  proposals  of  the  modem 
single-tax  philosophy. 


SIR  JOHN  ^rACDOXEI.L 
18.16- 


I 

r 


^\ 


CHAPTER  V 

Sir  John  Macdonell,  1846- 

IT  is  odd  that  a  man  whose  writings  have  apparently  escaped 
the  notice  of  today's  economists  should  be  the  only  living 
writer  whose  work  forty-two  years  later  finds  place  in  this 
symposium.  The  reason  for  this  obscuration  of  a  brilliant 
name  appears  to  be  that,  after  having  at  the  thesis  age  lighted 
the  economic  firmament  with  two  excellent  and  attractive  vol- 
umes, this  author  lapsed  into  the  law,  and  so  was  lost  to  the 
world  as  an  economic  reformer. 

Several  remarkable  coincidences  may  be  noted  in  the  careers 
of  these  two  English-American  contemporaries,  John  Mac- 
donell and  Henry  George.  In  1871,  Macdonell  at  twenty-five 
was  writing  A  Survey  of  Political  Economy,  while  George  at 
thirty-two  was  publishing  Our  Land  and  Land  Policy.  Mac- 
donell at  twenty-seven  was  publishing  The  Land  Question  in 
1873;  George  at  thirty-nine  was  publishing  Progress  and 
Poverty  in  1879.  So  far  as  any  record  goes,  they  pursued 
entirely  independent  ways. 

The  stories  of  these  men  have  also  their  contrasts.  Of  the 
Land  Question  the  late  Alexander  Macmillan,  founder  of  the 
great  publishing  house,  said  to  the  author :  "  Our  reader  thinks 
well  of  the  book.  It  is  original,  and  though  there  is  no  profit 
in  it,  I  am  interested  in  it,  and  will  publish  it,"  which  he  did, 
and  the  book  met  with  scholarly  appreciation.  Progress  and 
Poverty,  on  the  contrary,  went  begging  for  a  publisher,  but 
met  with  phenomenal  popular  favor. 

23 


■ 


24  The  Principles  of  Natural  Taxation 

Antedating  by  six  years  Henry  George's  Progress  and 
Poverty,  one  is  greatly  attracted  by  the  clearness  with  which 
Macdonell  set  forth  many  of  the  principles  to  which  George 
gave  extended  treatment.  His  exposition  of  the  burdenless- 
ness  of  a  land  tax  brings  great  strength  to  the  cause,  because 
it  fills  a  wide  gap  in  the  front  line  left  by  Henry  George,  which 
was  but  slowly  detected  by  many  of  his  followers.  His  statis- 
tics of  the  urban  values  of  his  own  time,  as  well  as  his  effectual 
disposal  of  fertility  as  a  source  of  economic  rent,  more  than 
anticipated  Mr.  George. 

Inasmuch  as  Mr.  George  wrote  his  Our  Land  and  Land 
Policy  as  early  as  187 1,  one  naturally  wonders  if  that  pamphlet 
had  given  special  stimulus  to  Mr.  MacdonelFs  thought.  The 
fact  is  that  he  was  not  so  influenced,  as  his  book  had  a  totally 
different  origin.  He  found  in  the  pamphlet  some  sentences 
which  agreed  with  his  own  conclusions,  but  they  were  arrived 
at  independently  and  in  a  very  natural  way.  His  own  discus- 
sion goes  a  long  way  in  helping  to  distinguish  the  socialization 
of  rent  from  the  nationalization  of  land.  The  interest  evoked 
by  the  time  and  circumstance  of  his  writings  and  their  recov- 
ery, as  it  were,  for  readers  of  today,  is  the  reason  for  giving  so 
much  importance  in  this  collection  to  his  notably  thorough 
work.  No  student  of  economic  problems  can  read  these  stimu- 
lating volumes  without  regret  that  the  author  did  not  resist  the 
blandishments  of  English  law  and  bestow  upon  the  world  the 
ripe  fruits  of  his  early  promise. 

Sir  John  Macdonell,  K.C.B.,  M.A.,  was  born  in  1846.  He 
was  a  graduate  of  Aberdeen  University,  and  has  long  been 
familiarly  known  to  the  law  in  almost  every  capacity  open  to 
that  profession.  He  is  known  as  a  writer  upon  law,  especially 
on  international  law,  for  the  chief  reviews  and  magazines  and 
periodical  press,  untiring  in  the  cause  of  law  reform  and  busy 


Sir  John  Macdonell,  1846- 


25 


just  at  present  with  a  book  on  Treaties  for  the  Carnegie  En- 
dowment Trustees.  He  is  a  Fellow  of  the  British  Academy, 
and  editor  of  Corporation  Legislation,  a  journal  not  unknown 
in  America. 

Soon  after  graduation,  Macdonell  became  connected  with 
the  Scotsman,  a  newspaper  which  advocated  the  old  economic 
doctrines  in  their  extreme  form.  A  former  editor  had  been 
McCulloch,  the  great  expositor  of  the  old  classical  political 
economy.  He  was  invited  by  the  proprietors  to  write  a  series 
of  articles,  or  a  sort  of  manual  of  political  economy,  to  correct 
popular  heresies.  To  the  amazement  of  the  proprietors,  his 
study  led  him  to  profound  disagreement  with  the  orthodox 
economists.  He  published  a  volume  stating  his  conclusions 
which  were  at  variance  not  only  with  the  older  school,  but  also 
with  much  of  Mill's  teaching.  The  book  was  welcomed  as 
opening  up  some  new  paths,  and  first  led  many  prominent 
economists  to  doubt  the  efficacy  of  the  old  doctrines. 

At  his  own  home  in  the  Highlands,  he  had  seen  some  cruel 
effects  of  the  existing  land  system,  and  was  brought  by  them 
and  by  continued  study  to  examine  the  subject  and  to  write 
this  volume,  The  Land  Question,  which  was  published  in 
1873.*  In  it  all  the  essentials  of  the  single  tax  are  clearly 
set  forth  and  ingenious  methods  of  effecting  an  easy  transition 
from  our  present  systems  of  taxation  are  suggested.  Several 
passages  from  his  book  are  here  reproduced  to  illustrate  his 
line  of  thought. 

He  thus  describes  the  nature  and  origin  of  economic  rent : 

Monopolies  they,  indeed,  all  are;  but  some,  if  not  all  of 
them,  are  natural,  spontaneous,  and  inevitable.     They  may  be 

used  well  or  ill,  but  monopolies  they  will  remain One 

class  of  them,  such  as  land  and  mines,  are  monopolies  because 

1  Macdonell,  Sir  John,  The  Land  Question,  Macmillan  &  Co.,  London, 
1873. 


f 


26 


The  Principles  of  Natural  Taxation 


they,  like  other  natural  agents  of  production,  are  limited.  They 
yield  rent  in  the  economist's  meaning  of  the  term Econo- 
mists have  been  at  great  pains  to  explain  the  nature  of  rent. 
Starting  from  the  fact  that  the  soil  of  a  country  is  limited  in 
extent,  they  have  pointed  out  that  even  were  it  homogeneous,  of 
uniform  fertility,  and  equally  commodious  in  all  parts,  the  right 
to  possess  it  would  draw  with  it  the  power  to  exact  rent  as  popu- 
lation expanded.  The  monopoly  of  a  necessity  of  existence  must 
create  one  kind  of  rent.  Economists  have  also  explained  that, 
even  if  the  soil  of  a  country  be  practically  unlimited,  differences 
in  fertility  and  situation  will  originate  another  kind  of  rent,  that 
kind  which  Ricardo  has  called,  not  very  happily,  perhaps,  the 
price  paid  for  **  the  original  and  indestructible  powers  of  the  soil." 

In  the  following  passage,  he  clearly  shows  that  economic 
rent  belongs  to  the  community  because  it  is  produced  by  the 
community. 

I  cannot  conceive  the  distinction  between  land,  or  natural 
monopolies,  and  other  kinds  of  property  being  put  more  clearly 
and  forcibly  than  in  the  following  passage  which  I  take  from  an 
essay  by  Professor  Cairnes:  "A  bale  of  cloth,  a  machine,  a 
house,  owes  its  value  to  the  labor  expended  upon  it,  and  belongs 
to  the  person  who  expends  or  employs  the  labor:  a  piece  of 
land  owes  its  value  —  so  far  as  its  value  is  affected  by  the  causes 
I  am  now  considering  —  not  to  the  labor  expended  upon  it,  but 
to  that  expended  upon  something  else  —  to  the  labor  expended 
in  making  a  railroad,  or  in  building  houses  in  an  adjacent  town ; 
and  the  value  thus  added  to  the  land  belongs,  not  to  the  persons 
who  have  made  the  railway  or  built  the  houses,  but  to  someone 
who  may  not  even  be  aware  that  these  operations  are  being  car- 
ried on  —  nay,  who  perhaps  has  exerted  all  his  efforts  to  prevent 
their  being  carried  on." 

Of  the  total  proceeds  of  any  acre  of  ordinary  land,  so  much 
is  the  return  on  the  permanent  or  durable  capital  —  drains,  fences, 
etc.,  invested  therein;  so  much  is  the  return  on  the  circulating 
capital  renewed  annually,  or  at  short  intervals;  and  the  residue 
is  ascribable  to  permanent  and  inherent  attributes  of  soil,  situa- 
tion, proximity  to  markets,  roads,  railways,  etc.,  and  to  what  I 
may  term  the  general  state  of  society.  That  the  first  part  should 
accrue  to  the  landowner,  if,  as  not  un frequently  happens,  he 


Sir  John  Macdonell,  1846- 


27 


furnishes  the  capital  for  permanent  improvements,  is  right ;  that 
the  second  should  go  to  the  usufructuary  or  farmer  is  also  clear ; 
and  what  seems  equally  indisputable  is  that  the  last,  consisting 
of  economical  rent,  should  go  to  the  general  body  of  society. 
It  having  been  shown  that  "  economical  rent "  is  paid  for  differ- 
ences in  quality  and  situation  of  land,  created  by  no  man,  or 
that  it  originates  in  circumstances  not  to  be  credited  to  the  land- 
owner, it  would  naturally  have  been  expected  that  from  Ricardo's 
principles  would  have  been  unanimously  and  instantly  deduced 
the  conclusion  that  economical  rent  should  not  become  the  sub- 
ject of  private  property,  that  no  private  individual  should  be 
permitted  to  monopolize  "  the  original  and  indestructible  proper- 
ties of  the  soil,"  and  what  no  man  had  created  or  earned  by 
labor  of  his,  no  man  should  own.  It  would  have  been  only 
natural  for  all  who  accepted  the  preceding  account  of  rent  to 
hold  that  rent  which  proceeded  from  the  common  labors  of  the 
community  should  belong  to  it,  that  wages  were  not  more  fitly 
the  reward  of  the  laborer,  or  profits  the  reward  of  the  capitalist, 
than  was  rent,  as  Ricardo  understood  it,  the  appanage  of  the 
community  or  State,  and  that,  to  quote  the  popular  phrase,  "  the 
land  was  the  property  of  the  people."  For  these  reasons,  abso- 
lute property  in  land  would  appear  to  be  theoretically  unjust 
whenever  economical  rent  appears.  Of  course,  there  might  be 
cited  other  reasons  why  this  should  be  so;  and,  to  name  only 
one,  land  is  a  necessity  of  existence,  and  society  might  not  subsist 
were  men  free  to  employ  it  as  they  pleased.  We  would  not 
tolerate  a  race  of  proprietors  of  the  stamp  of  the  notorious  Lucas, 
who  wished  to  let  his  fields  run  to  waste.  We  should  be  sacri- 
ficing the  end  to  the  means  were  we  to  suffer  the  landowner's 
rights  to  make  the  existence  of  society  impossible,  uncertain,  or 
difficult.  But  one  sufficient  reason  for  denying  absolute  property 
in  land,  springs  from  the  fact  that  its  proprietor  becomes,  in 
the  natural  course  of  things,  the  recipient  of  an  unearned 
residuum. 

We  shall,  perhaps,  be  told  that  there  is  a  great  objection  in 
principle  to  the  conclusion  here  arrived  at:  it  would  bring  the 
State  into  a  region  from  which  it  should  be  excluded.  Now, 
laissez  faire  is  a  good  rule  when  the  meddler  is  antagonistic  to 
the  meddled  with;  but  he  seems  to  violate  laissez  faire  most 
deeply  who  lets  value  which  the  community,  or  assuredly  no 
single  individual,  has  created  be  taken  from  it  by  private  persons. 


28  The  Principles  of  Natural  Taxation 

And  if  it  be  possible  for  the  State,  or  for  municipalities,  to 
manage  any  or  all  of  these  monopolies,  there  seems  little  standmg 
in  the  way  of  the  assertion  that  they  are  the  primary  resources 
of  Government.     Since  there  are  many  things  from  which  their 
owners  may,  with  ordinary  exertion,  or  no  exertion  at  all,  draw 
rent,  or  something  above  the  usual  profits  on  capital,  if  too  much 
has  not  been  expended  in  the  purchase,  and  since  the  State,  ever 
needy,  is  compelled  at  present  to  draw  its  revenue  from  taxes 
which  are  a  hardship  to  all,  and  a  grievous  burden  to  the  poor, 
it  is  no  paradox  to  affirm  that  the  maintenance  of  the  State 
should  be  provided,  as  far  as  may  be,  out  of  those  funds  which 
Nature  herself  seems  to  have  appropriated  to  public  purposes, 
arising  as  they  do  out  of  common  or  public  exertions.    The  onus 
of  proving  the  expediency  of  letting  even  one  of  those  funds 
fall  into  the  private  domain  rests  on  those  who  propose  it.     In 
one  point  of  view,  it  matters  little  perhaps  whether  the  public 
or  private  persons  own  the  sites  of  cities.    But  if  one  mode  of 
tenure  brings  vast  wealth  or  competence  to  a  few,  and  releases 
so  many  from  the  wholesome  bondage  of  labor,  and  if  the  other 
relieves  the  whole  community  from  burdensome  taxes  or  rates, 
and  eases  all  a  little  without  giving  idleness  to  any,  need  we  hesi- 
tate or  doubt  as  to  which  is  preferable?     Such  being  the  alter- 
natives, do  we  not  squander  or  pawn  the  natural  and  primary 
resources  of  the  State  when  we  suffer  private  hands  to  monopo- 
lize them?    That  which  presses  on  no  man,  yet  benefits  all,  is  on 
the  face  of  it  a  better  mode  of  obtaining  a  revenue  than  that 
which  mulcts  all,  it  may  be,  unequally,  and  perhaps  to  the  grievous 
injury  of  some.     That  which,  taking  from  no  man's  just  earn- 
ings, yet  provides  for  the  just  common  wants,  is  conspicuously 
superior  to  a  system  of  which  the  true  principle,  according  to 
Mr  Lowe,  is  that  you  must  pinch  every  class  until  it  cries  out. 
An'  offer  is  made  of  a  mode  of  raising  revenue,  which  takes 
from  none  what  they  have  rightly  earned,  which  need  rob  no 
man  of  what  he  has  rightly  bought,  and  which  will  replenish  the 
Treasury,  no  man  being  mulcted,  no  man  wronged ;  and  are  we 
to  reject  this  offer,  and  forever  allow  so  many  private  interests 
to  gather  round  this  public  domain  that  it  shall  be  useless  and 
perverted?    To  a  like  question  the  answer  once  made  was  de- 
cidedly negative.     For  a  time  the  revenue  of  this,  as  of  every 
other  State  of  Europe,  came  from  rent.     But  the  answer  was 
revoked :  the  feudal  duties  incident  to  property  fell  into  desue- 


Sir  John  Macdonell,  1846- 


29 


tudc,  and  ultimately  they  were  abolished;  much  of  the  Crown 
land  was  squandered ;  and  for  centuries  the  nation  has  been 
reaping  the  harvest  of  its  errors,  each  sheaf  whereof  has  been 
some  tax,  often  vexatious  and  cruel.  Ministers  cannot  govern 
the  country  for  less  than  £70,000,000.  We  vex  the  poor  with 
indirect  taxes,  we  squeeze  the  rich,  we  ransack  heaven  and  earth 
to  find  some  new  impost  palatable  or  tolerable,  and  all  the  time, 
these  hardships  going  on,  neglected  or  misapplied,  there  have 
Iain  at  our  feet  a  multitude  of  resources  ample  enough  for  all 
just  common  wants,  growing  as  they  grow,  and  so  marked  out 
that  one  may  say  they  form  Nature's  budget.  Such  seems  the 
rationale  of  the  subject  of  which  the  land  question  forms  a  part. 
And  so  \ve  may  say  that,  if  property  in  land  be  ever  placed  on 
a  theoretically  perfect  basis,  no  private  individual  will  be  the 
recipient  of  economical  rent.  Bastiat,  it  may  be  mentioned,  saw 
that  logic  and  justice  demanded  no  less ;  and,  anxious  to  escape 
from  such  a  conclusion  and  to  buttress  the  fabric  of  society  as 
he  found  it,  he  sought  to  undermine  Ricardo's  theory,  and  to 
prove,  in  the  face  of  familiar  facts,  that  all  rent  was  the  return 
on  the  landowner's  capital.  Less  logical  economists  in  this 
country  have  at  once  expounded  Ricardo's  theory  and  defended 
the  position  of  the  English  landowner.  How  few  have  seen  and 
owned  the  simple  truth  which  follows  from  his  doctrine  is  some- 
what amazing,  and  equally  strange  is  the  small  number  of  those 
who,  having  seen  the  truth,  were  courageous  enough  to  utter  it. 

Here  he  indorses  Henry  George  in  looking  forward  to 
the  rent  tax  as  the  single  tax  and  in  pointing  out  the  natural 
law  by  which  its  volume  is  apportioned  to  the  growing  needs 
of  the  community: 

But,  granting  the  above  to  be  the  ideal  mode  of  obtaining 
revenue,  it  would  follow,  that  just  as  we  should  seek  to  replace 
loans  by  taxes,  so  should  we  seek  to  substitute  for  the  latter 
rent  drawn  from  natural  monopolies;  and  it  would  seem  not 
unreasonable  to  hope  that  as  loans  have  ceased  to  be  the  regular 
resources  of  all  solvent  governments,  so  may  taxes.  Thus  only 
shall  we  have  the  benefits  of  government  without  the  burdens 

And,  granting  the  above  theory  to  be  true,  does  there  not 
arise  a  conception  of  a  beautiful,  simple,  and  useful  law,  provid- 
ing for  the  expenditure  of  the  State,  without  the  aid  of  states- 


!l^ 


30  The  Principles  of  Natural  Taxation 

men's  ingenuity,  and  with  all  the  certainty  of  a  physical  law? 
We  recognize  the  possibility  of  the  normal  revenue  constantly 
keeping  pace  with  the  normal  expenditure.     Note  the  simulta- 
neous movements  in  both  the  social  wants  and  the  social  resources 
and  means.    A  country,  let  us  suppose,  is  barbarous  and  sparsely 
peopled;   we  contemplate  Persia,  or  the  India  of  pre-Anghcan 
times.     In  that  low  state  of  civilization  the  acknowledged  com- 
mon interests  are  few,  and  a  land  revenue,  or  the  rent  of  the 
soil,  will  suffice  to  cover  the  common  expenses.     Then  comes  a 
denser  state  of  population:    we  contemplate  modern  European 
countries;    the  general  expenses  of  society  have  grown.     But, 
simultaneously  with  their  growth,  grows  also  the  needed  nutri- 
ment,  and   wherever  the   common   expenses   are,   of   necessity, 
heaviest,  that  is,  in  great  towns  and  cities,  there  do  these  monopo- 
lies of  which  we  have  spoken  multiply  and  wax  in  remunerative- 
ness.     There  flourish  pauperism  and  crime,  costliest  scourges, 
and  there  also  does  the  value  of  land  rise  highest,  and  there,  too, 
appear  docks,  telegraphs,  etc.,  and  other  natural  monopolies,  m 
the  most  lucrative  form.    The  wants  come,  and  their  causes  bring 
also  the  wherewithal  to  satisfy  them.     Sheer  pedantry  it  would 
be  to  limit  the  expenditure  of  any  State  in  all  circumstances, 
and  however  trying  the  emergencies,  to  the  resources  provided 
by  these  funds.    So  long  as  there  exist  pauperism  and  a  perma- 
nent criminal  population,  so  long  as  there  are  wars  to  be  waged, 
and  indemnities  to  be  paid,  so  long  certainly  must  we  resort  to 
taxes  or  loans.     In  times  of  transition,  too,  such  as  1859,  for 
instance,  was  to  India,  there  may  be  experienced  difficulty  in 
making  the  expenditure  and  revenue  of  all  sorts  balance.     But 
the  ideal  to  which  we  should  strive  to  attain,  and  which  may 
be  open  to  other  States  less  compromised  than  England  by  a 
long  history,  seems  to  be  that  which  I  have  described.    Though 
that  harmony  cannot  be  practically  illustrated  here,  it  may  be  so 
where  there  is  no  call  to  meet  emergencies.  ^    ,       T^ 

De  Tocqueville  has  told  us  — and  it  scarcely  needed  a  De 
Tocqueville  to  tell  us— that  a  danger  ahead  in  democratic  times 
is  the  danger  lest  the  power  of  the  government  should  be  em- 
ployed by  "  our  masters  "  in  bleeding  the  rich,  and  absorbing  the 
earnings  of  all  those  whose  means  tower  above  their  neighbors . 
Communism,  or  some  of  its  evils,  may  invade  us  under  the  guise 
of  improved  taxation  or  a  democratic  budget.  Graduated  income 
taxes  may  be  gradients  to  it.     And  truly,  when  no  principle 


Sir  John  Macdonell,  1846- 


31 


governs  the  selection  of  taxes,  or  the  amount  to  be  taken  by 
means  of  them,  it  is  hard  to  convince  the  interested  that  they 
are  pushing  taxation  to  extremity.  Let  those,  therefore,  who 
regard  the  advent  of  democracy  as  inevitable,  and  who  do  not 
desire  to  see  governments  ruling  by  largesses  extorted  from  the 
wealthy  by  the  proletariat,  welcome  a  revenue  system  which 
seems  to  set  natural  limits  and  barriers  to  the  demands  of  potent 
and  rapacious  poverty.  Let  them  recollect  that  there  is  a  peril 
lest  future  revenue  come  from  the  income  tax :  that  the  majority 
of  the  electors  are  not  subject  to  it;  that  they  may  encourage 
resort  to  it;  and  that,  indeed,  this  danger  almost  approaches  a 
certainty,  unless  we  manage  to  dispense  with  an  income  tax.  Let 
them  embrace  with  gladness  a  system  which  enlists  justice  on 
their  side,  or  rather,  what  is  different,  a  consciousness  on  the 
part  of  the  rapacious  that  justice  is  against  them.  It  may  prove 
well  hereafter  if  the  share  of  the  State  is  defined  almost  as 
sharply  as  the  portion  of  the  capitalist  or  the  laborer. 

We  see,  then,  the  possibility  of  government,  local  and  im- 
perial, without  taxation.  To  no  transcendental  motives  does  the 
project  appeal.  It  demands  no  miraculous  draught  of  adminis- 
trative talents  or  public  virtues.  It  is  simple  and  intelligible. 
It  is  nothing  but  giving  the  body  politic  the  blood  which  it  has 
secreted.  And  even  those  who  say  that  the  principle  is  a  barren 
theory,  or  that  we  invoke  it  too  late  to  apply  it,  will  own  that  it 
is  in  unison  with  much  that  goes  on  around  us  —  with  the  grow- 
ing disbelief  in  laissez  faire  as  sterilely  taught  of  old,  the  taking 
over  so  many  branches  of  industry  by  the  State,  the  perplexity, 
strikingly  revealed  in  the  report  of  more  than  one  committee,  of 
how  to  regulate  railways  without  owning  them,  the  growth  of 
companies  of  almost  State  dimensions,  and  the  necessity  of 
investing  them  with  State  privileges. 

He  admits  practical  difficulties  but  denies  that  we  should  be 
deterred  thereby  from  moving  toward  a  natural  system  of 
taxation,  especially  when  we  consider  the  social  benefits  which 
will  follow  its  adoption: 

Those,  too,  will  admit  that  revenue  reform  would  become 
clear,  that  all  scrappy  suggestions  would  be  welded  into  one 
principle  which  a  child  might  understand,  and  that  the  march 
of  the  financier  would  be  certain,  if  not  easy,  were  there  truth 


32  The  Principles  of  Natural  Taxation 

and  value  in  this  principle,  the  departure  from  which  has  perhaps 
been  not  the  least  of  unrecorded  errors.  I  know  how  far  out  of 
the  path  we  and  others  have  strayed,  how  hard  it  is  to  hark  back, 
and  how  easy  it  is  to  speak  in  three  words  that  which  generations 
of  strong  minds  will  not  accomplish.  We  have  been  puttmg  hills 
and  seas  between  us  and  this  principle.  Not  in  our  time,  perhaps 
never,  will  they  be  wholly  cast  down  and  utterly  dried  up.  But 
I  still  presume  to  think  that  it  is  good  to  contemplate  a  splendid 
possibility,  some  dim  similitude  of  which  may  one  day  be  realized, 
to  the  unspeakable  benefit  of  society. 

I  have  written  the  above  in  deference  to  the  observation  of 
Turgot:  "It  is  always  the  best  with  which  one  ought  to  be 
occupied  in  theory.  To  neglect  this  search  under  the  pretext 
that  this  best  is  not  practicable  in  the  actual  circumstances,  is  to 
wish  to  solve  two  questions  at  once ;  it  is  to  renounce  the  advan- 
tage of  placing  the  questions  in  that  simplicity  which  can  alone 
render  them  susceptible  of  demonstration ;  it  is  to  plunge  without 
a  clue  into  an  inextricable  labyrinth  and  to  wish  to  investigate 
all  the  routes  at  once,  or  rather  it  is  voluntarily  to  shut  one's  eyes 
to  the  light  by  putting  oneself  in  the  impossibility  of  finding  it." 
It  will  be  well,  as  he  advises,  to  separate  the  two  questions, 
"What  should  be  done?"  and  "What  can  be  done?"  Now,  if 
theorists  have  been  prone  to  exaggerate  the  ease  with  which 
principles  of  the  above  character  could  be  carried  into  effect, 
there  has  been  another  error  of  an  opposite  kind. 

He  makes  several  ingenious  suggestions  for  overcoming 
the  difficulties  of  the  transitional  period.  If  the  state  is  to  pur- 
chase the  land,  the  purchase  may  be  effected  by  paying  to 
present  landowners  the  difference  between  a  permanent  and  a 
temporary  annuity  for,  say,  fifty  years,  or  by  making  present 
payment  of  the  reversionary  value  of  the  land.  But  that  all 
the  benefits  of  land  nationalization  without  the  complexities 
and  difficulties  involved  in  government  ownership  may  be 
attained  by  the  expedient  of  taxation  is  clearly  hinted  in  the 
following  remarkable  passage : 

I  presume  to  think  that  the  acquisition  of  the  soil  by  the 
State  seems  easier  in  the  light  of  these  simple  truths.    Time  rather 


Sir  John  Macdonell,  1846- 


33 


than  huge  votes  of  money,  judicious  and  temperate  taxation 
rather  than  purchase,  may  help  very  much  to  nationalize  the  land. 

In  the  following  passage  he  anticipates  one  of  the  most 
modern  modes  (and  undoubtedly  the  most  simple  and  equitable 
mode)  of  ultimately  securing  to  the  state  the  whole  or  major 
part  of  all  economic  rent.  He  points  out  that  an  old  land  tax 
is  a  burdenless  tax,  and  that  therefore  equity  not  only  permits 
but  also  demands  that  the  rate  should  be  increased  at  regular 
intervals.  Otherwise  landowners  as  such,  escape  taxation 
altogether : 

There  is  another  mode  which,  only  give  time,  would  facilitate 
the  same  work.  It  may  be  shown  that  if  a  special  tax  be  imposed 
upon  land,  and  if  it  be  suffered  to  subsist,  it  will,  in  course  of 
time,  cease  to  be  felt  as  a  tax.  Land  will  be  bought  and  sold 
subject  to  it;  offers  will  be  made,  and  prices  will  be  settled,  with 
a  reference  to  it ;  and  each  purchaser  who  buys  for  the  purpose 
of  earning  the  average  rate  of  profit  will  reduce  the  purchase 
money,  owing  to  the  existence  of  the  tax.  If  he  does  not,  it  will 
be  because  he  prefers  something  to  profits.  Hence  the  land  tax 
imposed  in  1693,  so  far  as  it  is  not  redeemed,  has  probably  ceased 
to  be  felt  as  a  tax.  "  It  is  no  more  a  burden  on  the  landlord 
than  the  share  of  one  landlord  is  a  burden  on  the  other.  The 
landowners  are  entitled  to  no  compensation  for  it,  nor  have  they 
any  claim  to  its  being  allowed  for,  as  part  of  their  taxes."* 
Hence,  too,  it  follows  that  if  it  was  originally  fair  to  impose  a 
land  tax  of  4$",  it  is  now  fair  to  add  a  tax  of  the  same  amount ; 
or,  in  other  words,  if  the  landowner  of  the  reign  of  Victoria 
may  be  justly  called  upon  to  bear  as  heavy  a  burden  as  that 
borne  by  his  forefather,  the  land  tax  must  be  raised  to  85,  of 
which  4f  will  be  a  rent-charge  or  the  share  of  a  joint  tenant, 
and  only  the  remainder  will  be  of  the  nature  of  a  tax.  CcBteris 
paribus,  the  landowner's  profits  will  be  as  high  under  the  &y  land 
tax  as  were  those  of  his  predecessor  under  the  4^.  No  doubt  it 
may  be  said  that  the  landlord's  return  on  his  capital  is  constantly 
diminishing.^     But  this  decline  is  simultaneous  with  a  general 

^  Mill,  J.  S.,  The  Principles  of  Political  Economy, 
2  Thiers,  L.  A.,  De  la  Propriete,  p.  153. 


i  ^! 


II  ii 


I  ii 


34  The  Principles  of  Natural  Taxation 

lowering  of  the  rate  of  profits  derivable  from  all  branches  of 
industry ;  and,  admitting  the  facts  to  be  as  alleged,  it  still  would 
be  true  that  the  relative  subtraction  from  the  landowner's  incomes 
owing  to  the  4s  and  the  Ss  taxes  would  be  the  same.  In  course 
of  time  the  same  causes  which  effaced  the  first  four  shillings 
would  remove  the  weight  of  the  8s:  whenever  land  is  sold,  it 
will  be  so  with  an  eye  to  the  existence  of  the  latter  tax.  The 
process  will  not  stop  here ;  assuming  that  rents  do  not  fall,  that 
land  is  freely  sold,  that  no  equivalent  tax  is  levied  upon  person- 
alty, and  that  the  increments  of  taxation  are  imposed  at  very 
distant  intervals,  in  the  lapse  of  time  each  addition  to  the  land 
tax  will  be  shifted  from  the  landowners.  Thus  it  would  seem 
that  there  is  no  taxing  them  always  unless  the  land  tax  be 
repeatedly  raised,  and  that,  if  such  an  impost  is  just  at  all,  the 
State  must  in  fairness  keep  whittling  at  the  portion  of  the  land- 
owner until,  at  some  distant  period,  it  is  absorbed  by  taxation.^ 

Ricardo  and  the  earlier  writers  on  the  subject  confined  their 
attention  almost  exclusively  to  agricultural  rent.  A  merit  of 
Macdoneirs  treatment  is  the  emphasis  which  he  places  upon 
urban  rent.  It  is  here  where  the  abuses  of  privilege  are  most 
rampant.  The  following  passage  is  noteworthy  in  this  con- 
nection : 

So  far  the  principles  which  ought  to  govern  property  in  land. 
Let  us  proceed  to  apply  them  with  an  eye  to  the  special  circum- 
stances of  the  various  kinds.  There  are  many  reasons  why  we 
should  begin  with  urban  land.  With  respect  to  it,  there  is  ample 
scope  and  most  pressing  urgency  for  the  application  of  the  prin- 
ciples which  we  have  stated.  In  the  ground  rents  of  cities  are 
to  be  seen  perfect  samples  of  "  economical  rent,"  due  to  monopoly, 
produced  by  no  man's  labor,  assuredly  not  always  by  the  labor 
of  the  owner  of  the  soil.  The  rents  of  houses,  so  far  as  ground 
rent  is  an  element  therein,  are  solely  the  prices  paid  for  situation, 
or  "the  original  and  indestructible  properties  of  the  soil."  Thus 
the  Duke  of  Bedford  and  the  Marquis  of  Westminster  exact 
some  hundreds  of  thousand  of  pounds  annually  from  those  who 
enrich  their  property.     They  are  remunerated  because  certain 

*  For  a  detailed  statement  of  this  method  worked  out  by  Mr.  C.  B.  Fille- 
brown  for  the  city  of  Boston,  see  Catechism,  No.  65  (chap,  xv  infra,  p.  234). 


Sir  John  Macdonell,  1846- 


35 


llii 


land  is  situated  in  Middlesex  —  a  circumstance  in  which  one  may 
be  pardoned  for  failing  to  recognize  the  beneficent  hand  of  the 
owner.  Of  the  annual  ratable  value  of  London,  for  instance, 
computed  at  £23,000,000,  an  increasingly  large  portion  is  the 
value  of  ground  rents.  When  a  square  foot  of  land  in  Victoria 
Street  lets  for  one  pound  sterling,  we  may  judge  of  the  immense 
revenue  flowing  from  this  source  into  private  purses.  Those 
increments  scarcely  ever  proceed  solely  from  the  diligent  exer- 
tions of  the  proprietors.  Were  they  imbeciles  instead  of  good 
men  of  business,  they  must  earn  more  than  thousands  of  toiling 
artisans ;  were  they  Solons  or  Solomons,  it  would  not  make  much 
difference.  Their  position  of  affluence  is  independent  of  virtue 
or  vice,  prudence  or  folly.  They  exist;  that  is  their  service. 
It  was  the  sole  service  of  most  of  their  ancestors.  In  the  prices 
paid  for  sites  in  cities,  we  see  the  most  surprising  instances  of 
rises  in  value  of  that  character  which  Mr.  Mill  terms  the 
"unearned  increment."  A  few  examples  occur  to  me.  Some- 
what marvelous  though  they  may  seem,  they  cannot  be  scouted 
as  exceptional.  A  piece  of  land  in  Holborn,  purchased  in  1552 
for  £160,  now  yields  £5,000  a  year;  a  wharf  in  Castle  Baynard, 
bought  for  £2,000  in  1670,  lately  realized  £110,000;^  and  an  acre 
of  land  at  South  Kensington,  which  was  sold  for  £3,200  in  1852, 
fetched  £23,250  in  i860.  We  are  told  that  the  price  of  an  acre 
of  the  most  valuable  uncovered  land  in  the  city  of  London  after 
the  Great  Fire  of  1660  "  was  £30,000,  or  about  one-third  of  the 
value  of  the  land  when  built  upon.  At  the  present  time  the 
highest  rate  for  unbuilt  land  may  be  taken  at  £1,000,000  an  acre, 
and  such  value  constitutes  fully  three-fourths  of  the  value  of 
the  property  after  it  has  buildings  upon  it."  ^  .  .  .  . 

What  contribution  do  those  proprietors  make  to  local  taxa- 
tion? It  may  be  asserted  that  some  of  their  property  contributes 
absolutely  nothing  to  the  newly  imposed  rates,  and  inadequately 
to  the  older  rates.  The  assertion  may  be  proved.  At  the  time 
when  many  of  the  now  running  leases  of  ninety-nine  years  were 
entered  into,  there  would  have  been  no  anticipation  of  the  outlay 
caused  by,  and  the  rates  imposed  in  consequence  of,  the  Thames 
Embankment  and  the  Main  Drainage  Scheme.  These  items 
could  not  have  formed  a  factor  in  old  bargains ;  and  such  rates 

*  Sir  Charles  Trevelyan. 

^  Paper  read  by  Mr.  Edmund  James  Smith  at  Institution  of  Surveyors, 
January  29,  1872. 


i! 


If 


ll 


i,;- 


M 


36  The  Principles  of  Natural  Taxation 

imposed,  let  us  bear  in  mind,  for  purposes  of  permanent  improve- 
ment, must  have  fallen  wholly  on  those  possessmg  temporary 
interests  — the  owners  of  houses  and  the  occupiers.     It  is  no 
doubt  true  that  at  certain  periods  in  the  first  half  of  this  century, 
the  poor-  and  county-rates  were  high  in  Middlesex.     Thus,  in 
1803  the  poor-  and  county-rates,  with  a  portion  of  the  church- 
rate,  amounted  to  3s  S'Ad,  and  in  1868  rates  of  all  kinds  to 
%s  iiHd.    But  the  general  tendency  has  been  towards  a  steady 
increase  of  the  rates.    Nor  did  those  exemptions  begin  with  the 
imposing  of  the  Metropolitan  Consolidated  Rate  to  meet  the 
wants  of  the  Metropolitan  Board  of  Works.    One  who  examines 
the  local  or  private  measures,  passed  for  the  most  part  in  the 
reigns  of  George  iii  and  George  iv,  in  order  to     pave,  cleanse, 
light,  water,  and  embellish"  various  squares  in  London,  ^ylll  find 
them  studded  with  acts  of  favoritism  to  landlords.    Looking,  tor 
instance,  into  George  IV,  c.  58,  relating  to  Grosvenor  Place  and 
other  lanes  and  streets  adjoining,  I  find  among  its  140  clauses 
one  giving  powers  to  commissioners  to  compel  owners  and  build- 
ers of  houses  where  there  ought  to  be  streets  to  pave,  level   or 
^avel  them.     But  the  act  especially  exempted  Robert,  Larl  ot 
Grosvenor,  from  paying  for  the  improvement  of  his  own  prop- 
erty    It  also  empowered  him  to  put  whatever  fences  or  gates 
he  was  pleased  to  erect  on  streets  which  others  maintained.     A 
similar  provision  appears  in  many  of  the  Acts  passed  in  the  last 
century  for  the  purpose  of  paving  or  embellishing  the  various 
estates  on  which  much  of  the  west  of  London  is  built.    Some  ot 
the  Acts— .for  instance,  that  relating  to  the  Calthorpe  estate  — 
practically  absolve  the  owner  of  the  freehold  from  all  charges 
The  ratepayers,  in  short,  were  mulcted  in  order  to  improve  and 
"  embellish "  the  landowners'  estates.     Thus   the  Duke  of  Bed- 
ford went  to  some  expense  with  respect  to  Oakley  Square.    But 
I  find  that  the  Vestry  of  St.  Pancras  repaid  him.     The  facts 
remain  as  they  are  here  stated,  somewhat  shabby  and  incredible 

though  they  may  seem -^u     «o^ 

We  have  stirred  late,  and  we  cannot  now  move  with  ease, 
but  something  may  yet  be  done  in  the  right  direction;  and  when 
London  possesses  a  local  government  superior  to  that  formed 
bv  the  Local  Management  Acts,  and  similar  to  that  which  Mr 
Mill  has  proposed,  we  may  take  the  first  great  step.  Here  if 
anywhere,  there  is  a  sphere  and  an  occasion  for  the  application 
of  Mr   Mill's  theory  of  the  unearned  increment.    Here,  in  the 


Sir  John  Macdonell,  1846- 


37 


most  flagrant  form,  is  that  divorce  between  industry  and  earn- 
ings which  breeds  communism;  and  those  who  hesitate  to  urge 
the  acquisition  of  the  entire  soil  by  the  State  may  fearlessly  put 
in  operation  their  principles  with  respect  to  London  and  other 
great  cities.  For  we  are  not  quite  too  late.  Justice  may  be  done, 
and  even  generosity  accorded,  to  all  concerned,  and  yet  we  may 
be  drawing  near,  at  no  mean  speed,  to  that  ideal  time  in  which 
the  soil  shall  belong  to  the  community. 

To  sum  up :  it  is  but  justice  to  Sir  John  Macdonell  to  assert 
that  no  more  recent  writer  has  set  forth  with  greater  force 
and  clearness  than  he,  the  true  nature  of  economic  rent  and 
its  peculiar  fitness  as  a  source  of  national  and  municipal  reve- 
nue. He  recognizes  it  as  a  social  product  and  hence  as  the 
legitimate  property  of  the  state.  He  emphasizes  the  impor- 
tance of  urban  rent.  Finally,  his  statements  are  always  sane 
and  temperate.  He  recognizes  the  difficulties  of  correcting 
long-standing  abuses,  however  glaring,  and  he  proposes  solu- 
tions of  the  difficult  problems  which  for  ingenuity  and  breadth 
of  vision  have  not  been  excelled. 


!  m 


ii 


CHAPTER  VI 
Henry  George,  1839-1897 

WERE  we  asked  to  state  in  a  word  what  was  Henry 
George's  chief  contribution  to  the  movement  which  is 
the  subject  of  our  inquiry,  we  should  answer  that  it  was  he 
who  gave  it  the  breath  of  life.  His  predecessors,  Smith,  Mill, 
Dove,  Burgess,  and  Macdonell,  had  already  elucidated  the 
general  principles  involved  in  the  taxation  of  land  values.  But 
whereas  before  his  time  the  question  was  one  of  little  more 
than  academic  interest,  since  his  time  it  has  become  with  thou- 
sands of  ardent  men  and  women  almost  a  religion.  His  fol- 
lowers have  preached  his  gospel  with  missionary  zeal  and  the 
so-called  single  tax  and  the  name  of  Henry  George  have 
become  known  to  the  remotest  corners  of  the  globe.  When 
the  contributions  of  all  the  pioneers  in  this  movement  have 
been  finally  assessed,  Henry  George  will  be  remembered  as  fhe 
prophet,  the  reformer,  the  man  with  a  mission. 

His  life  was  well  calculated  to  develop  the  qualities  of 
courage  and  self-reliance  called  for  by  such  a  career.  He  was 
born  in  Philadelphia  in  1839.  His  formal  school  training  ter- 
minated with  a  few  months  in  the  high  school  when  he  was 
less  than  fourteen  years  old.  He  had,  however,  acquired  a 
taste  for  reading  so  that  his  real  education  suffered  no  inter- 
ruption. Perhaps  more  important  for  the  work  he  was  to  do 
than  any  book-learning,  was  his  education  in  the  school  of  life. 
From  the  time  he  left  the  high  school  until  his  death  in  1897 

38 


Henry  George,  1839-1897 


39 


experiences  were  crowded  into  the  span  of  years  which  might 
easily  make  of  him  a  hero  of  romance.  They  included  a  boy's 
realized  dream  of  going  to  sea  on  a  long  voyage  to  India,  learn- 
ing the  printer's  trade,  working  his  passage  to  California  as 
ship's  steward  on  a  lighthouse  steamer,  a  runaway  marriage 
with  the  lady  of  his  heart,  being  without  money  and  without 
prospects,  and  a  struggle  against  poverty  leading  him  at  one 
time  to  the  verge  of  desperation. 

Then  from  the  obscurity  and  privation  of  a  journeyman 
printer  and  editor  of  a  struggling  radical  paper,  he  emerges 
into  the  limelight  of  publicity.  He  beholds  a  vision,  and  con- 
ceives himself  to  have  received  a  divine  call  to  preach  the  new 
gospel.     In  his  own  words: 

Like  a  flash  it  came  upon  me  that  there  was  the  reason  of  ad- 
vancing poverty  with  advancing  wealth.  With  the  growth  of 
population  land  grows  in  value,  and  the  men  who  work  it  must  pay 
more  for  the  privilege.  I  turned  back  amidst  quiet  thought  to  the 
perception  that  then  came  to  me  and  has  been  with  me  ever  since. 

Thus  he  describes  his  vision,  and  later,  in  these  words, 
the  consciousness  of  a  divine  call : 

On  the  night  in  which  I  finished  the  final  chapter  of  Progress 
and  Poverty  I  felt  that  the  talent  entrusted  to  me  had  been  ac- 
counted for —  felt  more  fully  satisfied,  more  deeply  grateful  than 
if  all  the  kingdoms  of  the  earth  had  been  laid  at  my  feet. 

His  vision  is  first  crystallized  into  Our  Land  and  Land 
Policy,  and  later  amplified  and  systematized  in  Progress  and 
Poverty.  The  sale  of  the  latter  book  (completed  after  one 
year  and  seven  months  of  intense  labor,  and  at  first  refused 
by  all  publishers)  swells  into  the  millions  of  copies.  It  is 
translated  into  all  the  principal  languages  of  the  globe.  He 
becomes  a  mighty  leader  of  the  people  whose  eloquence  holds 


i     V 


40 


The  Principles  of  Natural  Taxation 


Henry  George,  1839-1897 


41 


% 


i  li 


i; 

ii 

r 


multitudes  spellbound,  and  he  dies  in  the  midst  of  a  whirl- 
wind campaign  for  mayor  of  the  greatest  city  on  the  continent. 

His  parents  were  devoted  church  people  and  he  himself, 
though  he  had  said  that  he  cared  nothing  for  creeds,  was  of 
an  intensely  religious  temperament.  Some  chapters  of  Prog- 
ress and  Poverty  were  written  in  a  spirit  of  almost  apocalyptic 
fervor,  and  it  was  this  that  gave  it  its  wide  currency.  It  was  a 
beatific  vision  to  the  outclassed  and  disinherited.  Its  title  indi- 
cates the  main  thought.  Science,  discovery,  invention,  all  that 
goes  by  the  name  of  progress  were  advancing  by  leaps  and 
bounds,  yet  the  men  who  toiled  the  hardest  had  small  share  in 
it.  Poverty  was  their  lot  as  it  had  been  the  lot  of  their  ances- 
tors before  there  had  been  any  talk  of  progress.  Why  was  it? 
Here  was  a  man  who  had  seen  a  vision  and  pointed  a  way  to 
deliverance.  So  the  people  read  his  works  and  joined  in  the 
new  crusade  against  unjust  power  and  privilege.  And  in  their 
leader  there  was  no  pretense.  He  believed  implicitly  in  himself 
and  in  his  gospel. 

All  these  facts  must  be  understood  in  order  to  appreciate 
Progress  and  Poverty,  It  is,  in  a  sense,  a  theological  work  as 
well  as  an  economic  textbook.  It  is,  on  the  one  hand,  an 
attempt  to  reconcile  the  concept  of  a  beneficent  deity  with  the 
poverty  and  misery  of  mankind,  and,  on  the  other  hand,  to 
analyze  the  causes  of  this  same  poverty  and  misery  by  a  coldly 
intellectual  process,  and  to  find  the  remedy  therefor.  It  is  to 
show  that  the  cause  lies  not  in  the  lack  of  God's  bounty,  but  in 
man's  blindness  to  natural  law. 

The  proposition  which  is  the  subject  of  this  volume  is  so 
closely  associated  with  the  name  of  Henry  George  that  the 
average  man  never  thinks  of  Henry  George  without  thinking 
of  the  single  tax  and  never  thinks  of  the  single  tax  without 
thinking  of  Henry  George.    Yet  the  doctrine  of  economic  rent 


and  the  propriety  of  recognizing  it  as  the  normal  revenue  of 
every  form  of  government  had  been  taught  before  his  time  and 
often  by  much  the  same  line  of  reasoning.  Nevertheless  it  is 
by  no  accident  that  the  honor  of  discovery  is  popularly  at- 
tributed to  Henry  George.  He  it  was  who  made  the  single  tax 
a  living  issue.  By  the  force  of  his  logic,  by  his  courage,  his 
eloquence,  and  above  all,  by  the  absolute  sincerity  of  his  con- 
viction that  he  had  made  a  discovery  not  only  of  a  just  and 
natural  system  of  taxation  but  also  of  a  system  which  was  to 
usher  in  a  social  and  economic  millennium,  he  aroused  an  in- 
different world  and  compelled  it  to  listen  to  his  message.  His 
doctrine  had  come  to  him  as  a  vision  and  he  preached  it  with 
the  absolute  self-confidence  of  one  of  the  Hebrew  prophets 
foretelling  the  new  Jerusalem.  It  was  this  that  gave  him  his 
immense  popularity  with  the  masses.  He  held  out  to  them 
the  promise  of  deliverance  from  poverty. 

The  subjoined  extracts  from  Henry  George's  works  cover 
the  purpose  of  this  book.  " Rent  and  the  Law  of  Rent"  is  its 
text  and  essence.  Those  from  Our  Land  and  Land  Policy, 
which  was  a  distinct  forerunner  of  Progress  and  Poverty, 
mark  the  date  of  his  real  entrance  into  the  economic  arena  as 
1871  instead  of  1879.  The  chapters,  "The  Remedy"  and 
"The  Canons  of  Taxation,"  are  those  for  which  he  is  best 
known  in  the  taxation  field. 

OUR  LAND  AND  LAND  POLICY^ 

SOMETHING   RADICAL   NEEDED 

What  we  want  is  something  which  shall  destroy  the  tendency 
to  the  aggregation  of  land,  which  shall  break  up  present  monopo- 
lization, and  which  shall  prevent  (by  doing  away  with  the  temp- 
tation) future  monopolization.    And  as  arbitrary  and  restrictive 

1  The  Works  of  Henry  George,  Vol.  ix,  chap,  v,  extracts  from  pp.  loi 
to  112.    Doubleday,  Page  &  Co.,  1898. 


i 


1. 


! 


42 


The  Principles  of  Natural  Taxation 


laws  are  always  difficult  to  enforce,  we  want  a  measure  which 
shall  be  equal,  uniform,  and  constant  in  its  operation ;  a  measure 
which  will  not  restrict  enterprise,  which  will  not  curtail  produc- 
tion, and  which  will  not  offend  the  natural  sense  of  justice. 

When  our  forty  millions  of  people  have  to  raise  eight  hundred 
million  dollars  per  year  for  public  purposes  we  cannot  have  any 
difficulty  in  discovering  such  a  remedy  in  the  adjustment  of 
taxation. 

TAXATION  OF  LAND  FALLS  ONLY  ON  ITS  OWNER 

There  is  one  peculiarity  in  a  land  tax.  With  a  few  trifling 
exceptions  of  no  practical  importance,  it  is  the  only  tax  which 
must  be  paid  by  the  holder  of  the  thing  taxed.  If  we  impose  a 
tax  upon  money  loaned,  the  lender  will  charge  it  to  the  bor- 
rower and  the  borrower  must  pay  it,  otherwise  the  money  will 
be  sent  out  of  the  country  for  investment,  and  if  the  borrower 
uses  it  in  his  business  he,  in  his  turn,  must  charge  it  to  his 
customers,  or  his  business  becomes  unprofitable.  If  we  impose 
a  tax  upon  buildings,  those  who  use  them  must  pay  it,  as  other- 
wise the  erection  of  buildings  becomes  unprofitable  and  will  cease 
until  rents  become  high  enough  to  pay  the  regular  profit  on  the 
cost  of  building  and  the  tax  besides.  But  not  so  with  land.  Land 
is  not  an  article  of  production.  Its  quantity  is  fixed.  No  matter 
how  little  you  tax  it  there  will  be  no  more  of  it ;  no  matter  how 
much  you  tax  it  there  will  be  no  less.  It  can  neither  be  removed 
nor  made  scarce  by  cessation  of  production.  There  is  no 
possible  way  in  which  owners  of  land  can  shift  the  tax 
upon  the  user. 

And  so  while  the  effect  of  taxation  upon  all  other  things  is  to 
increase  their  value,  and  thus  to  make  the  consumer  pay  the 
tax  —  the  effect  of  a  tax  upon  land  is  to  reduce  its  value  —  that 
is,  its  selling  price,  as  it  reduces  the  profit  of  its  ownership  with- 
out reducing  its  supply.  It  will  not,  however,  reduce  its  renting 
price.  The  same  amount  of  rent  will  be  paid ;  but  a  portion  of 
it  will  now  go  to  the  State  instead  of  to  the  landlord.  And 
were  we  to  impose  upon  land  a  tax  equal  to  the  whole  annual 
profit  of  its  ownership,  land  would  be  worth  nothing  and  might 
in  many  cases  be  abandoned  by  its  owners.  But  the  users  would 
still  have  to  pay  as  much  as  before  —  paying  in  taxes  what  they 
formerly  paid  as  rent.  And  reversely,  if  we  were  to  reduce  or 
take  off  the  taxes  on  land,  the  owner,  not  the  user,  would  get 


Henry  George,  1839-1897 


43 


the  benefits.    Rents  would  be  no  higher,  but  would  leave  more 
profit,  and  the  value  of  land  would  be  more. 

OF  THE  JUSTICE  OF  TAXING  LAND 

Here  is  a  lot  in  the  central  part  of  San  Francisco,  which, 
irrespective  of  the  buildings  upon  it,  is  worth  $100,000.  What 
gives  that  value?  Not  what  its  owner  has  done,  but  the  fact 
that  150,000  people  have  settled  around  it.  This  lot  yields  its 
owner  $10,000  annually.  Where  does  this  $10,000  come  from? 
Evidently  from  the  earnings  of  the  workers  of  the  community, 
for  it  can  come  from  nowhere  else. 

Here  is  a  lot  on  the  outskirts.  It  is  in  the  same  condition  in 
which  nature  left  it.  Intrinsically  it  is  worth  no  more  than  when 
there  were  but  a  hundred  people  at  Yerba  Buena  Cove.  Then 
it  was  worth  nothing.  Now  that  there  are  150,000  people  here 
and  more  coming,  it  is  worth  $3,000.  That  is,  its  owner  can 
command  $3,000  worth  of  the  labor  or  the  wealth  of  the  com- 
munity. What  does  he  give  for  this?  Nothing — the  land  was 
there  before  he  was. 

Suppose  a  community  like  that  of  San  Francisco,  in  which 
land,  though  in  individual  hands  as  now,  has  no  value.  Sup- 
pose, then,  that  all  at  once  the  land  was  given  a  value  of,  say, 
$150,000,000,  which  is  about  the  present  value  of  land  in  San 
Francisco.  What  would  be  the  effect?  That  a  tax,  of  which 
$150,000,000  is  the  capitalized  value,  would  be  levied  upon  the 
whole  community  for  the  benefit  of  a  portion.  There  would  be 
no  more  in  the  community  than  before,  and  no  greater  means 
of  producing  wealth.  But  of  that  wealth,  beyond  the  share 
which  they  formerly  had,  the  landowners  would  now  command 
$150,000,000.  That  is,  there  would  be  $150,000,000  less  for 
other  people  who  were  not  landholders. 

And  does  not  this  consideration  of  the  nature  and  effect  of 
land  values  go  far  to  explain  the  puzzling  fact  that  notwith- 
standing all  the  economies  in  production  and  distribution  which 
a  dense  population  admits,  just  as  a  community  increases  in 
population  and  wealth,  so  does  the  reward  of  the  laborer  decrease 
and  poverty  deepen? 

One  hundred  men  settle  in  a  new  place.  Land  has  at  first 
little  or  no  value.  The  net  result  of  their  labor  is  divided  pretty 
equally  between  them.  Each  one  gets  pretty  nearly  the  full 
value  of  his  contribution  to  the  general  stock.    The  community 


i 


f 


44  The  Principles  of  Natural  Taxation 

becomes  icx5,cxx).  Land  has  become  valuable,  its  value  perhaps 
aggregating  as  much  as  the  value  of  all  other  property.  The 
production  of  the  community  may  now  be  more  per  capita  for 
each  individual  who  works,  but  before  the  division  is  made,  one 
half  of  the  product  must  go  to  the  landholders.  How,  then,  can 
the  laborer  get  so  much  as  he  could  in  the  small  community? 

Now  in  this  view  of  the  matter— considering  land  values 
as  an  indication  of  the  appropriation  (thought  doubtless  the  neces- 
sary appropriation)  of  the  wealth  of  all;  considering  land  rentals 
as  a  tax  upon  the  labor  of  the  community,  is  not  a  tax  upon  land 
values  the  most  just  and  the  most  equal  tax  that  can  be  levied? 
Should  we  not  take  that  which  rightfully  belongs  to  the  whole 
before  we  take  that  which  rightfully  belongs  to  the  individual? 

THE  EFFECTS  OF  SUCH  A  CHANGE 

Consider  the  effects  of  the  adoption  of  such  a  system:  ^ 
The  mere  holder  of  land  would  be  called  on  to  pay  just  as 
much  taxes  as  the  user  of  land.  The  owner  of  a  vacant  city  lot 
would  have  to  pay  as  much  for  the  privilege  of  keeping  other 
people  off  it  till  he  wanted  to  use  it,  as  his  neighbor  who  has  a  fine 
house  upon  his  lot,  and  is  either  using  or  deriving  rent  from  it. 
The  monopolizer  of  agricultural  land  would  be  taxed  as  much  as 
though  his  land  were  covered  with  improvements,  with  crops, 
and  with  stock.  Land  prices  would  fall ;  land  speculation  would 
receive  its  death  blow ;'  land  monopolization  would  no  longer  pay. 
MilHons  and  millions  of  acres  from  which  settlers  are  now  shut 
out  would  be  abandoned  by  their  present  owners,  or  sold  to  set- 
tlers on  nominal  terms.  It  is  only  in  rare  cases  that  it  would  pay 
any  one  to  get  land  before  he  wanted  to  use  it,  so  that  those  who 
really  wanted  to  use  land  would  find  it  easy  to  get. 

RENT  AND  THE  LAW  OF  RENT^ 

The  term  rent,  in  its  economic  sense  —  that  is,  when  used, 
as  I  am  using  it,  to  distinguish  that  part  of  the  produce  which 

1  Doubtless  the  full  taxation  of  land  values  will  substantially  put  an 
end  to  holding  land  for  a  rise,  especially  long  holdings.  On  short  holdings 
it  may  be  that  it  will  not  immediately  kill  speculation.  Speculation  deals 
not  with  the  gross  capitalized  value  of  land,  but  with  its  net  capitalized 
value,  and  the  man  who  buys  land  heavily  taxed  at  $ioo  and  sells  it  for 
$200  profits  by  the  transaction  just  as  if  he  had  bought  lightly  taxed  land 
at  $900  and  sold  it  for  $i,ooo.    It  may  not  be  easy  to  head  off     quick 

turns"  in  real  estate.    Ed.  T^     ui  j 

2  George,  Henry,  Progress  and  Poverty,  Book  m,  chap,  ii,  Doubleday, 

Page  &  Co.,  1912. 


Henry  George,  1839-1897 


45 


accrues  to  the  owners  of  land  or  other  natural  capabilities  by 
virtue  of  their  ownership  —  differs  in  meaning  from  the  word 
rent  as  commonly  used.  In  some  respects  this  economic  meaning  is 
narrower  than  the  common  meaning ;  in  other  respects  it  is  wider. 

It  is  narrower  in  this :  in  common  speech,  we  apply  the  word 
rent  to  payments  for  the  use  of  buildings,  machinery,  fixtures, 
etc.,  as  well  as  to  payments  for  the  use  of  land  or  other  natural 
capabilities;  and  in  speaking  of  the  rent  of  a  house  or  the 
rent  of  a  farm,  we  do  not  separate  the  price  for  the  use  of  the 
improvements  from  the  price  for  the  use  of  the  bare  land.  But 
in  the  economic  meaning  of  rent,  payments  for  the  use  of  any 
of  the  products  of  human  exertion  are  excluded,  and  of  the 
lumped  payments  for  the  use  of  houses,  farms,  etc.,  only  that 
part  is  rent  which  constitutes  the  consideration  for  the  use  of 
the  land  —  that  part  paid  for  the  use  of  buildings  or  other 
improvements  being  properly  interest,  as  it  is  a  consideration 
for  the  use  of  capital. 

It  is  wider  in  this:  In  common  speech  we  speak  of  rent 
only  when  owner  and  user  are  distinct  persons.  But  in  the 
economic  sense  there  is  also  rent  where  the  same  person  is  both 
owner  and  user.  Where  owner  and  user  are  thus  the  same 
person,  whatever  part  of  his  income  he  might  obtain  by  letting 
the  land  to  another  is  rent,  while  the  return  for  his  labor  and 
capital  are  that  part  of  his  income  which  they  would  yield  him 
did  he  hire  instead  of  owning  the  land.  Rent  is  also  expressed 
in  a  selling  price.  When  land  is  purchased,  the  payment  which 
is  made  for  the  ownership,  or  right  to  perpetual  use,  is  rent 
commuted  or  capitalized.  If  I  buy  land  for  a  small  price  and 
hold  it  until  I  can  sell  it  for  a  large  price,  I  have  become  rich,  not 
by  wages  for  my  labor  or  by  interest  upon  my  capital,  but  by 
the  increase  of  rent.  Rent,  in  short,  is  the  share  in  the  wealth 
produced  which  the  exclusive  right  to  the  use  of  natural  capa- 
bilities gives  to  the  owner.  Wherever  land  has  an  exchange 
value  there  is  rent  in  the  economic  meaning  of  the  term.  Wher- 
ever land  having  a  value  is  used,  either  by  owner  or  hirer,  there 
is  rent  actual;  wherever  it  is  not  used,  but  still  has  a  value, 
there  is  rent  potential.  It  is  this  capacity  of  yielding  rent  which 
gives  value  to  land.  Until  its  ownership  will  confer  some 
advantage,  land  has  no  value.^ 

^  In  speaking  of  the  value  of  land  I  use  and  shall  use  the  words  as  refer- 
ring to  the  value  of  the  bare  land.  When  I  wish  to  speak  of  the  value  of 
land  and  improvements  I  shall  use  those  words. 


.•  * 


:^ 


46  The  Principles  of  Natural  Taxation 

Thus  rent  or  land  value  does  not  arise  from  the  productive- 
ness or  utility  of  land.  It  in  no  wise  represents  any  help  or  ad- 
vantage given  to  production,  but  simply  the  power  of  securing 
a  part  of  the  results  of  production.  No  matter  what  are  its 
capabilities,  land  can  yield  no  rent  and  have  no  value  until  some 
one  is  willing  to  give  labor  or  the  results  of  labor  for  the  privi- 
lege of  using  it;  and  what  any  one  will  thus  give  depends  not 
upon  the  capacity  of  the  land,  but  upon  its  capacity  as  com- 
pared with  that  of  land  that  can  be  had  for  nothing.  I  may 
have  very  rich  land,  but  it  will  yield  no  rent  and  have  no  value 
so  long  as  there  is  other  land  as  good  to  be  had  without  cost. 
But  when  this  other  land  is  appropriated,  and  the  best  land  to 
be  had  for  nothing  is  inferior,  either  in  fertility,  situation,  or 
other  qualitv,  my  land  will  begin  to  have  a  value  and  yield  rent. 
And  though  the  productiveness  of  my  land  may  decrease,  yet 
if  the  productiveness  of  the  land  to  be  had  without  charge  de- 
creases in  greater  proportion,  the  rent  I  can  get,  and  consequently 
the  value  of  my  land,  will  steadily  increase.  Rent,  in  short, 
is  the  price  of  monopoly,  arising  from  the  reduction  to  individual 
ownership  of  natural  elements  which  human  exertion  can  neither 
produce  nor  increase. 

If  one  man  owned  all  the  land  accessible  to  any  community, 
he  could,  of  course,  demand  any  price  or  condition  for  its  use 
that  he  saw  fit ;  and,  as  long  as  his  ownership  was  acknowledged, 
the  other  members  of  the  community  would  have  but  death  or 
emigration  as  the  alternative  to  submission  to  his  terms.  This 
has  been  the  case  in  many  communities ;  but  in  the  modern  form 
of  society,  the  land,  though  generally  reduced  to  individual 
ownership,  is  in  the  hands  of  too  many  different  persons  to  per- 
mit the  price  which  can  be  obtained  for  its  use  to  be  fixed  by 
mere  caprice  or  desire.  While  each  individual  owner  tries  to 
get  all  he  can,  there  is  a  limit  to  what  he  can  get,  which  con- 
stitutes the  market  price  or  market  rent  of  the  land,  and  which 
varies  with  different  lands  and  at  different  times.  The  law,  or 
relation,  which,  under  these  circumstances  of  free  competition 
among  all  parties,  the  condition  which  in  tracing  out  the  prina- 
ples  of  political  economy  is  always  to  be  assumed,  determines 
what  rent  or  price  can  be  got  by  the  owner,  is  styled  the  law  of 
rent  This  fixed  with  certainty,  we  have  more  than  a  starting 
point  from  which  the  laws  which  regulate  wages  and  interest 
may  be  traced.    For,  as  the  distribution  of  wealth  is  a  division, 


Henry  George,  1839-1897 


47 


in  ascertaining  what  fixes  the  share  of  the  produce  which  goes 
as  rent,  we  also  ascertain  what  fixes  the  share  which  is  left  for 
wages,  where  there  is  no  co-operation  of  capital ;  and  what  fixes 
the  joint  share  left  for  wages  and  interest,  where  capital  does 
co-operate  in  production. 

Fortunately,  as  to  the  law  of  rent  there  is  no  necessity  for 
discussion.  Authority  here  coincides  with  common  sense,^  and 
the  accepted  dictum  of  the  current  political  economy  has  the  self- 
evident  character  of  a  geometric  axiom.  This  accepted  law  of 
rent,  which  John  Stuart  Mill. denominates  the  pons  asinorum  of 
political  economy,  is  sometimes  styled  "  Ricardo's  law  of  rent," 
from  the  fact  that,  although  not  the  first  to  announce  it,  he  first 
brought  it  prominently  into  notice.^    It  is: 

The  rent  of  land  is  determined  by  the  excess  of  its  produce 
over  that  which  the  same  application  can  secure  from  the  least 
productive  land  in  use. 

This  law,  which  of  course  applies  to  land  used  for  other 
purposes  than  agriculture,  and  to  all  natural  agencies,  such  as 
mines,  fisheries,  etc.,  has  been  exhaustively  explained  and  illus- 
trated by  all  the  leading  economists  since  Ricardo.  But  its  mere 
statement  has  all  the  force  of  a  self-evident  proposition,  for  it 
is  clear  that  the  effect  of  competition  is  to  make  the  lowest  re- 
ward for  which  labor  and  capital  will  engage  in  production,  the 
highest  that  they  can  claim;  and  hence  to  enable  the  owner  of 
more  productive  land  to  appropriate  in  rent  all  the  return  above 
that  required  to  recompense  labor  and  capital  at  the  ordinary 
rate — that  is  to  say,  what  they  can  obtain  upon  the  least  produc- 
tive land  in  use,  or  at  the  least  productive  point,  where,  of  course, 
no  rent  is  paid. 

*I  do  not  mean  to  say  that  the  accepted  law  of  rent  has  never  been 
disputed.  In  all  the  nonsense  that  in  the  present  disjointed  condition  of  the 
science  has  been  printed  as  political  economy,  it  would  be  hard  to  find  any- 
thing that  has  not  been  disputed.  But  I  mean  to  say  that  it  has  the  sanction 
of  all  economic  writers  who  are  really  to  be  regarded  as  authority.  As 
John  Stuart  Mill  says  (Book  II,  chap,  xvi),  "there  are  few  persons  who 
have  refused  their  assent  to  it,  except  from  not  having  thoroughly  under- 
stood it.  The  loose  and  inaccurate  way  in  which  it  is  often  apprehended 
by  those  who  affect  to  refute  it  is  very  remarkable."  An  observation  which 
has  received  many  later  exemplifications. 

*  According  to  McCulloch  the  law  of  rent  was  first  stated  in  a  pamphlet 
by  Dr.  James  Anderson  of  Edinburgh  in  1777,  and  simultaneously  in  the 
beginning  of  this  century  by  Sir  Edward  West,  Mr.  Malthus,  and  Mr. 
Ricardo. 


48  The  Principles  of  Natural  Taxation 

Perhaps  it  may  conduce  to  a  fuller  understanding  of  the 
law  of  rent  to  put  it  in  this  form:  The  ownership  of  a  natural 
agent  of  production  will  give  the  power  of  appropriating  so  much 
of  the  wealth  produced  by  the  exertion  of  labor  and  capital  upon 
it  as  exceeds  the  return  which  the  same  application  of  labor  and 
capital  could  secure  in  the  least  productive  occupation  in  which 
they  freely  engage. 

This,  however,  amounts  to  precisely  the  same  thing,  for  there 
is  no  occupation  in  which  labor  and  capital  can  engage  which 
does  not  require  the  use  of  land ;  and,  furthermore,  the  cultiva- 
tion or  other  use  of  land  will  always  be  carried  to  as  low  a  point 
of  remuneration,  all  things  considered,  as  is  freely  accepted  in 
any  other  pursuit.  Suppose,  for  instance,  a  community  in  which 
part  of  the  labor  and  capital  is  devoted  to  agriculture  and  part 
to  manufactures.  The  poorest  land  cultivated  yields  an  average 
return  which  we  will  call  20,  and  20  therefore  will  be  the  aver- 
age return  to  labor  and  capital,  as  well  in  manufactures  as  in 
agriculture.  Suppose  that  from  some  permanent  cause  the  re- 
turn in  manufactures  is  now  reduced  to  15.  Clearly,  the  labor 
and  capital  engaged  in  manufactures  will  turn  to  agriculture; 
and  the  process  will  not  stop  until,  either  by  the  extension  of 
cultivation  to  inferior  lands  or  to  inferior  points  on  the  same 
land,  or  by  an  increase  in  the  relative  value  of  manufactured 
products,  owing  to  the  diminution  of  production  —  or,  as  a  mat- 
ter of  fact,  by  both  processes — the  yield  to  labor  and  capital 
in  both  pursuits  has,  all  things  considered,  been  brought  again 
to  the  same  level,  so  that  whatever  be  the  final  point  of  produc- 
tiveness at  which  manufactures  are  still  carried  on,  whether  it 
be  18  or  17  or  16,  cultivation  will  also  be  extended  to  that  point. 
And,  thus,  to  say  that  rent  will  be  the  excess  in  productiveness 
over  the  yield  at  the  margin,  or  lowest  point,  of  cultivation,  is 
the  same  thing  as  to  say  that  it  will  be  the  excess  of  produce 
over  what  the  same  amount  of  labor  and  capital  obtains  in  the 
least  remunerative  occupation. 

The  law  of  rent  is,  in  fact,  but  a  deduction  from  the  law 
of  competition,  and  amounts  simply  to  the  assertion  that  as  wages 
and  interest  tend  to  a  common  level,  all  that  part  of  the  general 
production  of  wealth  which  exceeds  what  the  labor  and  capital 
employed  could  have  secured  for  themselves,  if  applied  to  the 
poorest  natural  agent  in  use,  will  go  to  land  owners  in  the  shape 
of  rent.    It  rests,  in  the  last  analysis,  upon  the  fundamental  prin- 


Henry  George,  1839-1897 


49 


ciple,  which  is  to  political  economy  what  the  attraction  of  gravi- 
tation is  to  physics  —  that  men  will  seek  to  gratify  their  desires 
with  the  least  exertion. 

This,  then,  is  the  law  of  rent.  Although  many  standard 
treatises  follow  too  much  the  example  of  Ricardo,  who  seems 
to  view  it  merely  in  its  relation  to  agriculture,  and  in  several 
places  speaks  of  manufactures  yielding  no  rent,  when,  in  truth, 
manufactures  and  exchange  yield  the  highest  rents,  as  is  evinced 
by  the  greater  value  of  land  in  manufacturing  and  commercial 
cities,  thus  hiding  the  full  importance  of  the  law,  yet,  ever  since 
the  time  of  Ricardo,  the  law  itself  has  been  clearly  apprehended 
and  fully  recognized.  But  not  so  its  corollaries.  Plain  as  they 
are,  the  accepted  doctrine  of  wages  (backed  and  fortified  not 
only  as  has  been  hitherto  explained,  but  by  considerations  whose 
enormous  weight  will  be  seen  when  the  logical  conclusion  toward 
which  we  are  tending  is  reached)  has  hitherto  prevented  their 
recognition.^  Yet,  is  it  not  as  plain  as  the  simplest  geometrical 
demonstration,  that  the  corollary  of  the  law  of  rent  is  the  law 
of  wages,  where  the  division  of  the  produce  is  simply  between 
rent  and  wages ;  or  the  law  of  wages  and  interest  taken  together, 
where  the  division  is  into  rent,  wages,  and  interest?  Stated  re- 
versely, the  law  of  rent  is  necessarily  the  law  of  wages  and  in- 
terest taken  together,  for  it  is  the  assertion,  that  no  matter  what 
be  the  production  which  results  from  the  application  of  labor  and 
capital,  these  two  factors  will  receive  in  wages  and  interest  only 
such  part  of  the  produce  as  they  could  have  produced  on  land 
free  to  them  without  the  payment  of  rent  —  that  is,  the  least  pro- 
ductive land  or  point  in  use.  For,  if,  of  the  produce,  all  over 
the  amount  which  labor  and  capital  could  secure  from  land  for 
which  no  rent  is  paid  must  go  to  land  owners  as  rent,  then  all 
that  can  be  claimed  by  labor  and  capital  as  wages  and  interest 
is  the  amount  which  they  could  have  secured  from  land  yield- 
ing no  rent. 

Or  to  put  it  in  algebraic  form: 

As  Produce  =  Rent  +  Wages  -f-  Interest, 
Therefore,  Produce  —  Rent  =  Wages  -}-  Interest. 

Thus  wages  and  interest  do  not  depend  upon  the  produce 
of  labor  and  capital,  but  upon  what  is  left  after  rent  is  taken 

^  Buckle   (chap.  11,  History  of  Civilisation)    recognizes  the  necessary 
relation  between  rent,  interest,  and  wages,  but  evidently  never  worked  it  out. 


!■ 


m 


50 


The  Principles  of  Natural  Taxation 


out ;  or,  upon  the  produce  which  they  could  obtain  without  pay- 
ing rent  —  that  is,  from  the  poorest  land  in  use.  And  hence, 
no  matter  what  be  the  increase  in  productive  power,  if  the  in- 
crease in  rent  keeps  pace  with  it,  neither  wages  nor  interest  can 
increase. 

The  moment  this  simple  relation  is  recognized,  a  flood  of 
light  streams  in  upon  what  was  before  inexplicable,  and  seem- 
ingly discordant  facts  range  themselves  under  an  obvious  law. 
The  increase  of  rent  which  goes  on  in  progressive  countries  is 
at  once  seen  to  be  the  key  which  explains  why  wages  and  inter- 
est fail  to  increase  with  increase  of  productive  power.  For  the 
wealth  produced  in  every  community  is  divided  into  two  parts 
by  what  may  be  called  the  rent  line,  which  is  fixed  by  the  mar- 
gin of  cultivation,  or  the  return  which  labor  and  capital  could 
obtain  from  such  natural  opportunities  as  are  free  to  them  with- 
out the  payment  of  rent.  From  the  part  of  the  produce  below 
this  line  wages  and  interest  must  be  paid.  All  that  is  above  goes 
to  the  owners  of  land.  Thus,  where  the  value  of  land  is  low, 
there  may  be  a  small  production  of  wealth,  and  yet  a  high  rate 
of  wages  and  interest,  as  we  see  in  new  countries.  And,  where 
the  value  of  land  is  high,  there  may  be  a  very  large  production 
of  wealth,  and  yet  a  low  rate  of  wages  and  interest,  as  we  see 
in  old  countries.  And,  where  productive  power  increases,  as  it 
is  increasing  in  all  progressive  countries,  wages  and  interest  will 
be  affected,  not  by  the  increase,  but  by  the  manner  in  which  rent 
is  affected.  If  the  value  of  land  increases  proportionately,  all 
the  increased  production  will  be  swallowed  up  by  rent,  and  wages 
and  interest  will  remain  as  before.  If  the  value  of  land  increases 
in  greater  ratio  than  productive  power,  rent  will  swallow  up 
even  more  than  the  increase ;  and  while  the  produce  of  labor  and 
capital  will  be  much  larger,  wages  and  interest  will  fall.  It  is 
only  when  the  value  of  land  fails  to  increase  as  rapidly  as  pro- 
ductive power,  that  wages  and  interest  can  increase  with  the 
increase  of  productive  power.  All  this  is  exemplified  in  actual 
fact. 

HOW  EQUAL  RIGHTS  TO  THE  LAND  MAY  BE 
ASSERTED  AND  SECURED  ^ 

We  have  traced  the  want  and  suffering  that  everywhere  pre- 
vail among  the  working  classes,  the  recurring  paroxysms  of  in- 

1  Progress  and  Poverty^  Book  vni,  Giap.  ii. 


Henry  George,  1839-1897 


51 


dustrial  depression,  the  scarcity  of  employment,  the  stagnation 
of  capital,  the  tendency  of  wages  to  the  starvation  point,  that 
exhibit  themselves  more  and  more  strongly  as  material  progress 
goes  on,  to  the  fact  that  the  land  on  which  and  from  which  all 
must  live  is  made  the  exclusive  property  of  some. 

We  have  seen  that  there  is  no  possible  remedy  for  these  evils 
but  the  abolition  of  their  cause;  we  have  seen  that  private  prop- 
erty in  land  has  no  warrant  in  justice,  but  stands  condemned  as 
the  denial  of  natural  right  —  a  subversion  of  the  law  of  nature 
that  as  social  development  goes  on  must  condemn  the  masses  of 
men  to  a  slavery  the  hardest  and  most  degrading. 

We  have  weighed  every  objection,  and  seen  that  neither  on 
the  ground  of  equity  or  expediency  is  there  anything  to  deter  us 
from  making  land  common  property  by  confiscating  rent. 

But  a  question  of  method  remains.    How  shall  we  do  it? 

We  should  satisfy  the  law  of  justice,  we  should  meet  all  eco- 
nomic requirements,  by  at  one  stroke  abolishing  all  private  titles, 
declaring  all  land  public  property,  and  letting  it  out  to  the  high- 
est bidders  in  lots  to  suit,  under  such  conditions  as  would  sa- 
credly guard  the  private  right  to  improvements. 

Thus  we  should  secure,  in  a  more  complex  state  of  society, 
the  same  equality  of  rights  that  in  a  ruder  state  were  secured  by 
equal  partitions  of  the  soil,  and  by  giving  the  use  of  the  land  to 
whoever  could  procure  the  most  from  it,  we  should  secure  the 
greatest  production. 

Such  a  plan,  instead  of  being  a  wild,  impracticable  vagary, 
has  (with  the  exception  that  he  suggests  compensation  to  the 
present  holders  of  land  —  undoubtedly  a  careless  concession 
which  he  upon  reflection  would  reconsider)  been  indorsed  by 
no  less  eminent  a  thinker  than  Herbert  Spencer,  who  {Social 
Statics,  chap,  ix,  sec.  8)  says  of  it: 

"  Such  a  doctrine  is  consistent  with  the  highest  state  of  civilization ;  may 
be  carried  out  without  involving  a  community  of  goods,  and  need  cause  no 
very  serious  revolution  in  existing  arrangements.  The  change  required 
would  simply  be  a  change  of  landlords.  Separate  ownership  would  merge 
into  the  joint-stock  ownership  of  the  public.  Instead  of  being  in  the  pos- 
session of  individuals,  the  country  would  be  held  by  the  great  corporate 
body — society.  Instead  of  leasing  his  acres  from  an  isolated  proprietor,  the 
farmer  would  lease  them  from  the  nation.  Instead  of  paying  his  rent  to 
the  agent  of  Sir  John  or  his  Grace,  he  would  pay  it  to  an  agent  or  deputy 
agent  of  the  community.  Stewards  would  be  public  officials  instead  of  pri- 
vate ones,  and  tenancy  the  only  land  tenure.  A  state  of  things  so  ordered 
would  be  in  perfect  harmony  with  the  moral  law.    Under  it  all  men  would 


52  The  Principles  of  Natural  Taxation 

be  equally  landlords,  all  men  would  be  alike  free  to  become  tenants.  ...  . 
Clearly,  therefore,  on  such  a  system,  the  earth  might  be  mclosed.  occupied, 
and  cultivated,  in  entire  subordination  to  the  law  of  equal  freedom. 

But  such  a  plan,  though  perfectly  feasible,  does  not  seem  to 
me  the  best.  Or  rather  I  propose  to  accomplish  the  same  thmg 
in  a  simpler,  easier,  and  quieter  way  than  that  of  formally  con- 
fiscating all  the  land  and  formally  letting  it  out  to  the  highest 

bidders.  ,     ,  ^       ^ 

To  do  that  would  involve  a  needless  shock  to  present  customs 
and  habits  of  thought  —  which  is  to  be  avoided. 

To  do  that  would  involve  a  needless  extension  of  govern- 
mental machinery  — which  is  to  be  avoided.  r  ^  r       a 
It  is  an  axiom  of  statesmanship,  which  the  successful  found- 
ers of  tyranny  have  understood  and  acted  upon  — that  great 
changes  can  best  be  brought  about  under  old  forms.     We,  who 
would  free  men,  should  heed  the  same  truth.     It  is  the  natural 
method.     When  nature  would  make  a  higher  type,  she  takes  a 
lower  one  and  develops  it.    This,  also,  is  the  law  of  social  growth. 
Let  us  work  by  it.    With  the  current  we  may  ghde  fast  and  tar. 
Against  it,  it  is  hard  pulling  and  slow  progress.  ^     ^ 
I  do  not  propose  either  to  purchase  or  to  confiscate  private 
property  in  land.    The  first  would  be  unjust ;  the  second,  need- 
less     Let  the  individuals  who  now  hold  it  still  retain,  if  they 
want  to,  possession  of  what  they  are  pleased  to  call  f/i^tr  land. 
Let  them  continue  to  call  it  their  land.    Let  them  buy  and  se  , 
and  bequeath  and  devise  it.    We  may  safely  leave  them  the  shell 
if  we  take  the  kernel.^    It  is  not  necessary  to  confiscate  land,  tt 
is  only  necessary  to  confiscate  rent.                                    ,       .  . 
Nor  to  take  rent  for  public  uses  is  it  necessary  that  the  state 
should  bother  with  the  letting  of  lands,  and  assume  the  chances 
of  the  favoritism,  collusion,  and  corruption  this  might  involve. 
It  is  not  necessary  that  any  new  machinery  should  be  created. 
The  machinery  already  exists.     Instead  of  extending  it,  all  we 
have  to  do  is  to  simplify  and  reduce  it.    By  leaving  to  land  own- 
1  In  any  probable  inauguration  of  the  Single  Tax  the  ownership  of  land 
^Jth  use  ( wliich  is  all  that  economics  has  to  do  with)  will  be  worth  more 
r^H  Tore      OwnersWp    without  use,  will  be  worth  less  and  less.     With- 
ouf  ,^e   ownership  would  be  the  shell.    With  normal  use,  ownership    as 
the  best'fom  of  title  to  improvements,  would  be  the  very  kernel  of  civiliza- 
tion     Mr   George  at  this  point,  in  contemplating  the  l^^.d  owner   />.r.^, 
w^k  daht  of  the  user  of  land  who    s  the  buttress  of  society.    The  S  n^  e 
Tfx  hafbeen  side-mcked  in  tho"  sands  of  minds  by  this  unfortunate  simile 
of  the  shell  and  the  kernel.    Ed. 


Henry  George,  1839-1897 


53 


ers  a  percentage  of  rent  which  would  probably  be  much  less  than 
the  cost  and  loss  involved  in  attempting  to  rent  lands  through 
state  agency,  and  by  making  use  of  this  existing  machinery,  we 
may,  without  jar  or  shock,  assert  the  common  right  to  land  by 
taking  rent  for  public  uses. 

We  already  take  some  rent  in  taxation.  We  have  only  to 
make  some  changes  in  our  modes  of  taxation  to  take  it  all. 

What  I,  therefore,  propose  as  the  simple  yet  sovereign  rem- 
edy which  will  raise  wages,  increase  the  earnings  of  capital,  ex- 
tirpate pauperism,  abolish  poverty,  give  remunerative  employ- 
ment to  whoever  wishes  it,  afford  free  scope  to  human  powers, 
lessen  crime,  elevate  morals  and  taste  and  intelligence,  purify 
government  and  carry  civilization  to  yet  nobler  heights,  is  —  to 
appropriate  rent  by  taxation. 

In  this  way  the  State  may  become  the  universal  landlord 
without  calling  herself  so,  and  without  assuming  a  single  new 
function.  In  form,  the  ownership  of  land  would  remain  just 
as  now.  No  owner  of  land  need  be  dispossessed,  and  no  restric- 
tion need  be  placed  upon  the  amount  of  land  anyone  could  hold. 
For,  rent  being  taken  by  the  State  in  taxes,  land,  no  matter  in 
whose  name  it  stood  or  in  what  parcels  it  was  held,  would  be 
really  common  property,  and  every  member  of  the  community 
would  participate  in  the  advantages  of  its  ownership. 

Now,  insomuch  as  the  taxation  of  rent,  or  land  values,  must 
necessarily  be  increased  just  as  we  abolish  other  taxes,  we  may 
put  the  proposition  into  practical  form  by  proposing — 

To  abolish  all  taxoftion  save  that  upon  land  values. 

As  we  have  seen,  the  value  of  land  is  at  the  beginning  of 
society  nothing,  but  as  society  develops  by  the  increase  of  pop- 
ulation and  the  advance  of  the  arts,  it  becomes  greater  and 
greater.  In  every  civilized  country,  even  the  newest,  the  value 
of  the  land  taken  as  a  whole  is  sufficient  to  bear  the  entire  ex- 
penses of  government.  In  the  better  developed  countries  it  is 
much  more  than  sufficient.  Hence  it  will  not  be  enough  merely 
to  place  all  taxes  upon  the  value  of  land.  It  will  be  necessary, 
where  rent  exceeds  the  present  governmental  revenues,  com- 
mensurately  to  increase  the  amount  demanded  in  taxation,  and 
to  continue  this  increase  as  society  progresses  and  rent  advances. 
But  this  is  so  natural  and  easy  a  matter,  that  it  may  be  con- 
sidered as  involved,  or  at  least  understood,  in  the  proposition 


I; 

If 

1'^ 


54  The  Principles  of  Natural  Taxation 

to  put  all  taxes  on  the  value  of  land.  That  is  the  first  step,  upon 
which  the  practical  struggle  must  be  made.  When  the  hare  is 
once  caught  and  killed,  cooking  him  will  follow  as  a  matter  of 
course.  When  the  common  right  to  land  is  so  far  appreciated 
that  all  taxes  are  abolished  save  those  which  fall  upon  rent,  there 
is  no  danger  of  much  more  than  is  necessary  to  induce  them  to 
collect  the  public  revenues  being  left  to  individual  landholders. 

Experience  has  taught  me  (for  I  have  been  for  some  years 
endeavoring  to  popularize  this  proposition)  that  wherever  the 
idea  of  concentrating  all  taxation  upon  land  values  finds  lodg- 
ment sufficient  to  induce  consideration,  it  invariably  makes  way, 
but  that  there  are  few  of  the  classes  most  to  be  benefited  by  it, 
who  at  first,  or  even  for  a  long  time  afterward,  see  its  full  sig- 
nificance and  power.  It  is  difficult  for  workingmen  to  get  over 
the  idea  that  there  is  a  real  antagonism  between  capital  and 
labor.  It  is  difficult  for  small  farmers  and  homestead  owners 
to  get  over  the  idea  that  to  put  all  taxes  on  the  value  of  land 
would  be  unduly  to  tax  them.  It  is  difficult  for  both  classes  to 
get  over  the  idea  that  to  exempt  capital  from  taxation  would 
be  to  make  the  rich  richer  and  the  poor  poorer.  These  ideas 
spring  from  confused  thought.  But  behind  ignorance  and  preju- 
dice there  is  a  powerful  interest,  which  has  hitherto  dominated 
literature,  education,  and  opinion.  A  great  wrong  always  dies 
hard,  and  the  great  wrong  which  in  every  civilized  country  con- 
demns the  masses  of  men  to  poverty  and  want,  will  not  die  with- 
out a  bitter  struggle.  . 

I  do  not  think  the  ideas  of  which  I  speak  can  be  entertained 
by  the  reader  who  has  followed  me  thus  far;  but  inasmuch  as 
any  popular  discussion  must  deal  with  the  concrete,  rather  than 
with  the  abstract,  let  me  ask  him  to  follow  me  somewhat  fur- 
ther, that  we  may  try  the  remedy  I  have  proposed  by  the  ac- 
cepted canons  of  taxation.  In  doing  so,  many  incidental  bear- 
ings may  be  seen  that  otherwise  might  escape  notice. 

THE  PROPOSITION  TRIED  BY  THE  CANONS  OF 

TAXATION  ^ 

The  best  tax  by  which  public  revenues  can  be  raised  is  evi- 
dently that  which  will  closest  conform  to  the  following  condi- 
tions : 

'  Progress  and  Poverty,  Book  viii.  Chap.  in. 


Henry  George,  1839-1897 


55 


(i)  That  it  bear  as  lightly  as  possible  upon  production -— so 
as  least  to  check  the  increase  of  the  general  fund  from  which 
taxes  must  be  paid  and  the  community  maintained. 

(2)  That  it  be  easily  and  cheaply  collected,  and  fall  as  directly 
as  may  be  upon  the  uhimate  payers  —  so  as  to  take  from  the  peo- 
ple as  little  as  possible  in  addition  to  what  it  yields  the  govern- 
ment. 

(3)  That  it  be  certain —  so  as  to  give  the  least  opportunity 
for  tyranny  or  corruption  on  the  part  of  officials,  and  the  least 
temptation  to  law-breaking  and  evasion  on  the  part  of  the  tax- 
payers. 

(4)  That  it  bear  equally  —  so  as  to  give  no  citizen  an  advan- 
tage or  put  any  at  a  disadvantage,  as  compared  with  others. 

Let  us  consider  what  form  of  taxation  best  accords  with  these 
conditions.  Whatever  it  be,  that  evidently  will  be  the  best  mode 
in  which  the  public  revenues  can  be  raised. 

I.      THE  EFFECT  OF  TAXES  UPON  PRODUCTION 

All  taxes  must  evidently  come  from  the  produce  of  land  and 
labor,  since  there  is  no  other  source  of  wealth  than  the  union 
of  human  exertion  with  the  material  and  forces  of  nature.  But 
the  manner  in  which  equal  amounts  of  taxation  may  be  imposed 
may  very  differently  affect  the  production  of  wealth.  Taxation 
which  lessens  the  reward  of  the  producer  necessarily  lessens 
the  incentive  to  production ;  taxation  which  is  conditioned  upon 
the  act  of  production,  or  the  use  of  any  of  the  three  factors  of 
production,  necessarily  discourages  production.  Thus  taxation 
which  diminishes  the  earnings  of  the  laborer  or  the  returns  of 
the  capitalist  tends  to  render  the  one  less  industrious  and  intel- 
ligent, the  other  less  disposed  to  save  and  invest.  Taxation 
which  falls  upon  the  processes  of  production  interposes  an  arti- 
ficial obstacle  to  the  creation  of  wealth.  Taxation  which  falls 
upon  labor  as  it  is  exerted,  wealth  as  it  is  used  as  capital,  and 
as  it  is  cultivated,  will  manifestly  tend  to  discourage  production 
much  more  powerfully  than  taxation  to  the  same  amount  levied 
upon  laborers,  whether  they  work  or  play,  upon  wealth  whether 
used  productively  or  unproductively,  or  upon  land  whether  cul- 
tivated or  left  waste. 

The  mode  of  taxation  is,  in  fact,  quite  as  important  as  the 
amount.  As  a  small  burden  badly  placed  may  distress  a  horse 
that  could  carry  with  ease  a  much  larger  one  properly  adjusted, 


m' 


I 


i 


i''^ 


56  The  Principles  of  Natural  Taxation 

so  a  people  may  be  impoverished  and  their  power  of  producing 
wealth  destroyed  by  taxation  which,  if  levied  in  another  way, 
could  be  borne  with  ease.  A  tax  on  date  trees,  imposed  by  Mo- 
hammed AH,  caused  the  Egyptian  fellas  to  cut  down  their  trees ; 
but  a  tax  of  twice  the  amount  imposed  on  the  land  produced  no 
such  result.  The  tax  of  ten  per  cent  on  all  sales,  imposed  by 
the  Duke  of  Alva  in  the  Netherlands,  would,  had  it  been  main- 
tained, have  all  but  stopped  exchange  while  yielding  but  little 

revenue. 

But  we  need  not  go  abroad  for  illustrations.  The  production 
of  wealth  in  the  United  States  is  largely  lessened  by  taxation 
which  bears  upon  its  processes.  Shipbuilding,  in  which  we  ex- 
celled, has  been  all  but  destroyed  so  far  as  the  foreign  trade  is 
concerned,  and  many  branches  of  production  and  exchange  seri- 
ously crippled,  by  taxes  which  divert  industry  from  more  to  less 
productive  forms. 

This  checking  of  production  is  in  greater  or  less  degree  char- 
acteristic of  most  of  the  taxes  by  which  the  revenues  of  modern 
governments  are  raised.  All  taxes  upon  manufactures,  all  taxes 
upon  commerce,  all  taxes  upon  capital,  all  taxes  upon  improve- 
ments, are  of  this  kind.  Their  tendency  is  the  same  as  that  of 
Mohammed  Ali's  tax  on  date  trees,  though  their  effect  may  not 
be  so  clearly  seen. 

All  such  taxes  have  a  tendency  to  reduce  the  production  of 
wealth,  and  should,  therefore,  never  be  resorted  to  when  it  is 
possible  to  raise  money  by  taxes  which  do  not  check  production. 
This  becomes  possible  as  society  develops  and  wealth  accumu- 
lates. Taxes  which  fall  upon  ostentation  would  simply  turn  into 
the  public  treasury  what  otherwise  would  be  wasted  in  vain  show 
for  the  sake  of  show ;  and  taxes  upon  wills  and  devises  of  the 
rich  would  probably  have  little  effect  in  checking  the  desire  for 
accumulation,  which,  after  it  has  fairly  got  hold  of  a  man,  be- 
comes a  blind  passion.  But  the  great  class  of  taxes  from  which 
revenue  may  be  derived  without  interference  with  production 
are  taxes  upon  monopolies  —  for  the  profit  of  monopoly  is  in 
itself  a  tax  levied  upon  production,  and  to  tax  it  is  simply  to 
divert  into  the  public  coffers  what  production  must  in  any  event 

pay. 

There  are  among  us  various  sorts  of  monopolies.  For  in- 
stance, there  are  the  temporary  monopolies  created  by  the  pat- 
ent and  copyright  laws.     These  it  would  be  extremely  unjust 


Henry  George,  1839-1897 


57 


and  unwise  to  tax,  inasmuch  as  they  are  but  recognitions  of  the 
right  of  labor  to  its  intangible  productions,  and  constitute  a  re- 
ward held  out  to  invention  and  authorship.^  There  are  also  the 
onerous  monopolies  alluded  to  in  chapter  iv  of  Book  in,  which 
result  from  the  aggregation  of  capital  in  businesses  which  are  of 
the  nature  of  monopolies.  But  while  it  would  be  extremely  dif- 
ficult, if  not  altogether  impossible,  to  levy  taxes  by  general  law 
so  that  they  would  fall  exclusively  on  the  returns  of  such  mo- 
nopoly and  not  become  taxes  on  production  or  exchange,  it  is 
much  better  that  these  monopolies  should  be  abolished.  In  large 
part  they  spring  from  legislative  commission  or  omission,  as, 
for  instance,  the  ultimate  reason  that  San  Francisco  merchants 
are  compelled  to  pay  more  for  goods  sent  direct  from  New  York 
to  San  Francisco  by  the  Isthmus  route  than  it  costs  to  ship  them 
from  New  York  to  Liverpool  or  Southampton  and  thence  to 
San  Francisco,  is  to  be  found  in  the  "protective"  laws  which 
make  it  costly  to  build  American  steamers  and  which  forbid 

*  Following  the  habit  of  confounding  the  exclusive  right  granted  by  a 
patent  and  that  granted  by  a  copyright  as  recognitions  of  the  right  of  labor 
to  its  intangible  productions,  I  in  this  fell  into  error  which  I  subsequently 
acknowledged  and  corrected  in  the  Standard  of  June  23,  1888.  The  two 
things  are  not  alike,  but  essentially  different.  The  copyright  is  not  a  right 
to  the  exclusive  use  of  a  fact,  an  idea,  or  a  combination,  which  by  the  natu- 
ral law  of  property  all  are  free  to  use;  but  only  to  the  labor  expended  in 
the  thing  itself.  It  does  not  prevent  any  one  from  using  for  himself  the 
facts,  the  knowledge,  the  laws  or  combinations  for  a  similar  production,  but 
only  from  using  the  identical  form  of  the  particular  book  or  other  produc- 
tion—  the  actual  labor  which  has  in  short  been  expended  in  producing  it. 
It  rests  therefore  upon  the  natural,  moral  right  of  each  one  to  enjoy  the 
products  of  his  own  exertion,  and  involves  no  interference  with  the  similar 
right  of  any  one  else  to  do  likewise. 

The  patent,  on  the  other  hand,  prohibits  any  one  from  doing  a  similar 
thing,  and  involves,  usually  for  a  specified  time,  an  interference  with  the 
equal  liberty  on  which  the  right  of  ownership  rests.  The  copyright  is 
therefore  in  accordance  with  the  moral  law — it  gives  to  the  man  who  has 
expended  the  intangible  labor  required  to  write  a  particular  book  or  paint 
a  picture  security  against  the  copying  of  that  identical  thing.  The  patent 
is  in  defiance  of  this  natural  right.  It  prohibits  others  f  roni  doing  what  has 
been  already  attempted.  Every  one  has  a  moral  right  to  think  what  I  think, 
or  to  perceive  what  I  perceive,  or  to  do  what  I  do  —  no  matter  whether 
he  gets  the  hint  from  me  or  independently  of  me.  Discovery  can  give  no 
right  of  ownership,  for  whatever  is  discovered  must  have  been  already  here 
to  be  discovered.  If  a  man  makes  a  wheelbarrow,  or  a  book,  or  a  picture, 
he  has  a  moral  right  to  that  particular  wheelbarrow,  or  book,  or  picture,  but 
no  right  to  ask  that  others  be  prevented  from  making  similar  things.  Such 
a  prohibition,  though  given  for  the  purpose  of  stimulating  discovery  and 
invention,  really  in  the  long  run  operates  as  a  check  upon  them. 


p^ 

I 


IP' 


!• 


58  The  Principles  of  Natural  Taxation 

foreign  steamers  to  carry  goods  between  American  ports.  The 
reason  that  residents  of  Nevada  are  compelled  to  pay  as  much 
freight  from  the  East  as  though  their  goods  were  earned  to 
San  Francisco  and  back  again,  is  that  the  authority  which  pre- 
vents extortion  on  the  part  of  a  hack  driver  is  not  exercised 
in  respect  to  a  railroad  company.  And  it  may  be  said  generally 
that  businesses  which  are  in  their  nature  monopolies  are  properly 
part  of  the  functions  of  the  State,  and  should  be  assumed  by 
the  State.  There  is  the  same  reason  why  Government  should 
carry  telegraphic  messages  as  that  it  should  carry  letters;  that 
railroads   should  belong  to  the  public  as  that  common  roads 

should.  J 

But  all  other  monopolies  are  trivial  in  extent  as  compared 
with  the  monopoly  of  land.  And  the  value  of  land  expressing 
a  monopoly,  pure  and  simple,  is  in  every  respect  fitted  for  tax- 
ation. That  is  to  say,  while  the  value  of  a  railroad  or  telegraph 
line,  the  price  of  gas  or  of  a  patent  medicine,  may  express  the 
price  of  monopoly,  it  also  expresses  the  exertion  of  labor  and 
capital;  but  the  value  of  land,  or  economic  rent,  as  we  have 
seen,  is  in  no  part  made  up  from  these  factors,  and  expresses 
nothing  but  the  advantage  of  appropriation.  Taxes  levied  upon 
the  value  of  land  cannot  check  production  in  the  slightest  degree, 
until  they  exceed  rent,  or  the  value  of  land  taken  annually,  for 
unlike  taxes  upon  commodities,  or  exchange,  or  capital,  or  any 
of  the  tools  or  processes  of  production,  they  do  not  bear  upon 
production.  The  value  of  land  does  not  express  the  reward  of 
production,  as  does  the  value  of  crops,  of  cattle,  of  buildings, 
or  any  of  the  things  which  are  styled  personal  property  and 
improvements.  It  expresses  the  exchange  value  of  monopoly. 
It  is  not  in  any  case  the  creation  of  the  individual  who  owns 
the  land;  it  is  created  by  the  growth  of  the  community.  Hence 
the  community  can  take  it  all  without  in  any  way  lessening  the 
incentive  to  improvement  or  in  the  slightest  degree  lessening 
the  production  of  wealth.  Taxes  may  be  imposed  upon  the 
value  of  land  until  all  rent  is  taken  by  the  State,  without  re- 
ducing the  wages  of  labor  or  the  reward  of  capital  one  iota, 
without  increasing  the  price  of  a  single  commodity  or  making 
production  in  any  way  more  difficult. 

But  more  than  this.  Taxes  on  the  value  of  land  not  only 
do  not  check  production  as  do  most  other  taxes,  but  they  tend 
to  increase  production,  by  destroying  speculative  rent.     How 


Henry  George,  1839-1897 


59 


speculative  rent  checks  production  may  be  seen  not  only  in  the 
valuable  land  withheld  from  use,  but  in  the  paroxysms  of  in- 
dustrial depression  which,  originating  in  the  speculative  advance 
in  land  values,  propagate  themselves  over  the  whole  civilized 
world,  everywhere  paralyzing  industry,  and  causing  more  waste 
and  probably  more  suffering  than  would  a  general  war.  Taxa- 
tion which  would  take  rent  for  public  uses  would  prevent  all 
this;  while  if  land  were  taxed  to  anything  near  its  rental  value, 
no  one  could  afford  to  hold  land  that  he  was  not  using,  and  con- 
sequently land  not  in  use  would  be  thrown  open  to  those  who 
would  use  it.  Settlement  would  be  closer,  and  consequently  labor 
and  capital  would  be  enabled  to  produce  much  more  with  the 
same  exertion.  The  dog  in  the  manger  who,  in  this  country 
especially,  so  wastes  productive  power  would  be  choked  off. 

There  is  yet  an  even  more  important  way  by  which,  through 
its  effect  upon  distribution,  the  taking  of  rent  to  public  uses  by 
taxation  would  stimulate  the  production  of  wealth.  But  refer- 
ence to  that  may  be  reserved.  It  is  sufficiently  evident  that  with 
regard  to  production,  the  tax  upon  the  value  of  land  is  the  best 
tax  that  can  be  imposed.  Tax  manufactures,  and  the  effect  is 
to  check  manufacturing;  tax  improvements,  and  the  effect  is  to 
lessen  improvement;  tax  commerce,  and  the  effect  is  to  prevent 
exchange;  tax  capital,  and  the  effect  is  to  drive  it  away.  But 
the  whole  value  of  land  may  be  taken  in  taxation,  and  the  only 
effect  will  be  to  stimulate  industry,  to  open  new  opportunities 
to  capital,  and  to  increase  the  production  of  wealth. 

II.      AS  TO  EASE  AND    CHEAPNESS   OF   COLLECTION 

With,  perhaps,  the  exception  of  certain  licenses  and  stamp 
duties,  which  may  be  made  almost  to  collect  themselves,  but 
which  can  be  relied  on  for  only  a  trivial  amount  of  revenue,  a 
tax  upon  land  values  can,  of  all  taxes,  be  most  easily  and  cheaply 
collected.  For  land  cannot  be  hidden  or  carried  off;  its  value 
can  be  readily  ascertained,  and  the  assessment  once  made,  noth- 
ing but  a  receiver  is  required  for  collection. 

And  as  under  all  fiscal  systems  some  part  of  the  public  reve- 
nues is  collected  from  taxes  on  land,  and  the  machinery  for 
that  purpose  already  exists  and  could  as  well  be  made  to  col- 
lect all  as  a  part,  the  cost  of  collecting  the  revenue  now  obtained 
by  other  taxes  might  be  entirely  saved  by  substituting  the  tax  on 
land  values  for  all  other  taxes.    What  an  enormous  saving  might 


<• 


60  The  Principles  of  Natural  Taxation 

thus  be  made  can  be  inferred  from  the  horde  of  officials  now 
engaged  in  collecting  these  taxes.        ,      ,.„  ,   ^  ,. 

This  saving  would  largely  reduce  the  difference  between  what 
taxation  now  costs  the  people  and  what  it  yields,  but  the  sub- 
stitution of  a  tax  on  land  values  for  all  other  taxes  would 
operate  to  reduce  this  difference  in  an  even  more  important 

^^  A  tax  on  land  values  does  not  add  to  prices,  and  is  thus 
paid  directly  by  the  persons  on  whom  it  falls ;  whereas,  all  taxes 
upon  things  of  unfixed  quantity  increase  prices,  and  in  the  course 
of  exchange  are  shifted  from  seller  to  buyer,  increasing  as  they 
so  If  we  impose  a  tax  upon  money  loaned,  as  has  been  otten 
Attempted,  the  lender  will  charge  the  tax  to  the  borrower,  and 
the  borrower  must  pay  it  or  not  obtain  the  loan.  If  the  bor- 
rower uses  it  in  his  business,  he  in  his  turn  must  get  back 
the  tax  from  his  customers,  or  his  business  becomes  unprotit- 

If  we  impose  a  tax  upon  buildings,  the  users  of  buildings  must 
finally  pay  it,  for  the  erection  of  buildings  will  cease  until  build- 
ing rents  become  high  enough  to  pay  the  regular  profit  and  the 
tax  besides.    If  we  impose  a  tax  upon  manufactures  or  imported 
goods,  the  manufacturer  or  importer  will  charge  it  in  a  higher 
price  to  the  jobber,  the  jobber  to  the  retailer    and  the  retailer 
to  the  consumer.     Now,  the  consumer,  on  whom  the  tax  thus 
ultimately  falls,  must  not  only  pay  the  amount  of  the  tax,  but 
also  a  profit  on  this  amount  to  every  one  who  has  thus  advanced 
it— for  profit  on  the  capital  he  has  advanced  in  paying  taxes  is 
as  much  required  by  each  dealer  as  profit  on  the  capital  he  has 
advanced  in  paying  for  goods.    Manila  cigars  cost,  when  .^^ught 
of  the  importer  in  San  Francisco,  $70  a  thousand,  of  which  $14 
is  the  cost  of  the  cigars  laid  down  in  this  port  and  $56  is  the 
customs  duty.     But  the  dealer  who  purchases  these  cigars  to 
sell  again  must  charge  a  profit  not  on  $14,  '^^'f^^^'^^^X^^^ 
ciears!  but  on  $70,  the  cost  of  the  cigars  plus  the  duty     In  this 
wly  ail  taxes  which  add  to  prices  are  shifted  from  hand  to  hand 
increasing  as  they  go,  until  they  ultimately  rest  upon  consumers, 
Xo  thuf  ?ay  m'uch  more  than  is  received  by  the  government. 
Now,  the  way  taxes  raise  prices  is  by  increasing  the  cost  of  pro- 
ducdon,  and  checking  supply.    But  land  is  not  a  thing  of  hut^^^^^ 
production,  and  taxes  upon  rent  cannot  check  supply.     There- 
fore,  though  a  tax  on  rent  compels  the  landowners  to  pay  more. 


Henry  George,  1839-1897 


61 


It  gives  them  no  power  to  obtain  more  for  the  use  of  their  land, 
as  it  in  no  way  tends  to  reduce  the  supply  of  land.  On  the  con- 
trary, by  compelling  those  who  hold  land  on  speculation  to  sell 
or  let  for  what  they  can  get,  a  tax  on  land  values  tends  to  in- 
crease the  competition  between  owners,  and  thus  to  reduce  the 
price  of  land. 

Thus  in  all  respects  a  tax  upon  land  values  is  the  cheapest 
tax  by  which  a  large  revenue  can  be  raised  —  giving  to  the  gov- 
ernment the  largest  net  revenue  in  proportion  to  the  amount 
taken  from  the  people. 

in.     AS  TO  CERTAINTY 

Certainty  is  an  important  element  in  taxation,  for  just  as 
the  collection  of  a  tax  depends  upon  the  diligence  and  faithful- 
ness of  the  collectors  and  the  public  spirit  and  honesty  of  those 
who  are  to  pay  it,  will  opportunities  for  tyranny  and  corruption 
be  opened  on  the  one  side,  and  for  evasions  and  frauds  on  the 
other. 

The  methods  by  which  the  bulk  of  our  revenues  are  collected 
are  condemned  on  this  ground  if  on  no  other.  The  gross  cor- 
ruptions and  fraud  occasioned  in  the  United  States  by  the  whisky 
and  tobacco  taxes  are  well  known ;  the  constant  undervaluations 
of  the  Custom  House,  the  ridiculous  untruthfulness  of  income 
tax  returns,  and  the  absolute  impossibility  of  getting  anything 
like  a  just  valuation  of  personal  property,  are  matters  of  noto- 
riety. The  material  loss  which  such  taxes  inflict — the  item  of 
cost  which  this  uncertainty  adds  to  the  amount  paid  by  the  peo- 
ple but  not  received  by  the  government —  is  very  great.  When, 
in  the  days  of  the  protective  system  of  England,  her  coasts  were 
lined  with  an  army  of  men  endeavoring  to  prevent  smuggling, 
and  another  army  of  men  were  engaged  in  evading  them,  it  is 
evident  that  the  maintenance  of  both  armies  had  to  come  from 
the  produce  of  labor  and  capital;  that  the  expenses  and  profits 
of  the  smugglers,  as  well  as  the  pay  and  bribes  of  the  Custom 
House  officers,  constituted  a  tax  upon  the  industry  of  the  nation, 
in  addition  to  what  was  received  by  the  government.  And  so, 
all  douceurs  to  assessors;  all  bribes  to  customs  officials;  all 
moneys  expended  in  electing  pliable  officers  or  in  procuring  acts 
or  decisions  which  avoid  taxation ;  all  the  costly  modes  of  bring- 
ing in  goods  so  as  to  evade  duties,  and  of  manufacturing  so  as 


•:i! 


I 


4  f 


H 


i: 


'ii' 


Hiii 


62  The  Principles  of  Natural  Taxation 

to  evade  imposts ;  all  moieties,  and  expenses  of  detectives  and 
spies;  all  expenses  of  legal  proceedings  and  punishments,  not 
only  to  the  government,  but  to  those  prosecuted,  are  so  much 
which  these  taxes  take  from  the  general  fund  of  wealth  without 

adding  to  the  revenue.  , .  ,   ,    ,     . 

Yet  this  is  the  least  part  of  the  cost.  Taxes  which  lack  the 
clement  of  certainty  tell  most  fearfully  upon  morals.  Our  reve- 
nue laws  as  a  body  might  well  be  entitled  "Acts  to  promote  the 
corruption  of  public  officials,  to  suppress  honesty  and  encourage 
fraud,  to  set  a  premium  upon  perjury  and  the  subornation  of 
perjury,  and  to  divorce  the  idea  of  law  from  the  idea  of  jus- 
tice." This  is  their  true  character,  and  they  succeed  admirably. 
A  Custom  House  oath  is  a  byword;  our  assessors  regularly 
swear  to  assess  all  property  at  its  full,  true,  cash  value,  and 
habitually  do  nothing  of  the  kind ;  men  who  pride  themselves 
on  their  personal  and  commercial  honor  bribe  officials  and  make 
false  returns ;  and  the  demoralizing  spectacle  is  constantly  pre- 
sented of  the  same  court  trying  a  murderer  one  day  and  a  vender 
of  unstamped  matches  the  next ! 

So  uncertain  and  so  demoralizing  are  these  modes  of  taxa- 
tion that  the  New  York  Commission,  composed  of  David  A. 
Wells,  Edwin  Dodge,  and  George  W.  Cuyler  who  investigated 
the  subject  of  taxation  in  that  state,  proposed  to  substitute  for 
most  of  the  taxes  now  levied,  other  than  that  on  real  estate, 
an  arbitrary  tax  on  each  individual,  estimated  on  the  rental  value 
of  the  premises  he  occupied. 

But  there  is  no  necessity  of  resorting  to  any  arbitrary  assess- 
ment. The  tax  on  land  values,  which  is  the  least  arbitrary  of 
taxes,  possesses  in  the  highest  degree  the  element  of  certainty. 
It  may  be  assessed  and  collected  with  a  definiteness  that  partakes 
of  the  immovable  and  unconcealable  character  of  the  land  itself. 
Taxes  levied  on  land  may  be  collected  to  the  last  cent,  and  though 
the  assessment  of  land  is  now  often  unequal,  yet  the  assessment 
of  personal  property  is  far  more  unequal,  and  these  inequalities 
in  the  assessment  of  land  largely  arise  from  the  taxation  of  im- 
provements with  land,  and  from  the  demoralization  that,  spring- 
ing from  the  causes  to  which  I  have  referred,  affects  the  whole 
scheme  of  taxation.  Were  all  taxes  placed  upon  land  values, 
irrespective  of  improvements,  the  scheme  of  taxation  would  be 
so  simple  and  clear,  and  public  attention  would  be  so  directed 
to  it,  that  the  valuation  for  taxation  could  and  would  be  made 


Henry  George,  1839-1897 


63 


with  the  same  certainty  that  a  real  estate  agent  can  determine 
the  price  a  seller  can  get  for  a  lot. 

IV.      AS  TO  EQUALITY 

Adam  Smith's  canon  is,  that  "the  subjects  of  every  state 
ought  to  contribute  toward  the  support  of  the  government  as 
nearly  as  possible  in  proportion  to  their  respective  abilities ;  that 
is,  in  proportion  to  the  revenue  which  they  respectively  enjoy 
under  the  protection  of  the  state."  Every  tax,  he  goes  on  to  say, 
which  falls  only  upon  rent,  or  only  upon  wages,  or  only  upon 
interest,  is  necessarily  unequal.  In  accordance  with  this  is  the 
common  idea  which  our  systems  of  taxing  everything  vainly  at- 
tempt to  carry  out  —  that  every  one  should  pay  taxes  in  pro- 
portion to  his  means,  or  in  proportion  to  his  income. 

But,  waiving  all  the  insuperable  practical  difficulties  in  the 
way  of  taxing  every  one  according  to  his  means,  it  is  evident 
that  justice  cannot  be  thus  attained. 

Here,  for  instance,  are  two  men  of  equal  means,  or  equal 
incomes,  one  having  a  large  family,  the  other  having  no  one  to 
support  but  himself.  Upon  these  two  men  indirect  taxes  fall 
very  unequally,  as  the  one  cannot  avoid  the  taxes  on  the  food, 
clothing,  etc.,  consumed  by  his  family,  while  the  other  need  pay 
only  upon  the  necessaries  consumed  by  himself.  But,  supposing 
taxes  levied  directly,  so  that  each  pays  the  same  amount.  Still 
there  is  injustice.  The  income  of  the  one  is  charged  with  the 
support  of  six,  eight,  or  ten  persons;  the  income  of  the  other 
with  that  of  but  a  single  person.  And  unless  the  Malthusian 
doctrine  be  carried  to  the  extent  of  regarding  the  rearing  of  a 
new  citizen  as  an  injury  to  the  state,  here  is  a  gross  injustice. 

But  it  may  be  said  that  this  is  a  difficulty  which  cannot  be 
got  over;  that  it  is  Nature  herself  that  brings  human  beings 
helpless  into  the  world  and  devolves  their  support  upon  the  par- 
ents, providing  in  compensation  therefor  her  own  sweet  and 
great  rewards.  Very  well,  then,  let  us  turn  to  Nature,  and  read 
the  mandates  of  justice  in  her  law. 

Nature  gives  to  labor,  and  to  labor  alone.  In  a  very  Garden 
of  Eden  a  man  would  starve  but  for  human  exertion.  Now, 
here  are  two  men  of  equal  incomes  —  that  of  the  one  derived 
from  the  exertion  of  his  labor,  that  of  the  other  from  the  rent 
of  land.  Is  it  just  that  they  should  equally  contribute  to  the 
expenses  of  the  state?    Evidently  not.    The  income  of  the  one 


8  h 


■l.Bi 


N: 


64 


The  Principles  of  Natural  Taxation 


represents  wealth  he  creates  and  adds  to  the  general  wealth  of 
the  state ;  the  income  of  the  other  represents  merely  wealth  that 
he  takes  from  the  general  stock,  returning  nothing.  The  right 
of  the  one  to  the  enjoyment  of  his  income  rests  on  the  warrant 
of  Nature,  which  returns  wealth  to  labor ;  the  right  of  the  other 
to  the  enjoyment  of  his  income  is  a  mere  fictitious  right,  the 
creation  of  municipal  regulation,  which  is  unknown  and  unrec- 
ognized by  Nature.  The  father  who  is  told  that  from  his  labor 
he  must  support  his  children  must  acquiesce,  for  such  is  the 
natural  decree ;  but  he  may  justly  demand  that  from  the  income 
gained  by  his  labor  not  one  penny  shall  be  taken,  so  long  as  a 
penny  remains  of  incomes  which  are  gained  by  a  monopoly  of 
the  natural  opportunities  which  Nature  offers  impartially  to  all, 
and  in  which  his  children  have  as  their  birthright  an  equal  share. 

Adam  Smith  speaks  of  incomes  as  "enjoyed  under  the  pro- 
tection of  the  State " ;  and  this  is  the  ground  upon  which  the 
equal  taxation  of  all  species  of  property  is  commonly  insisted 
upon  —  that  it  is  equally  protected  by  the  State.  The  basis  of 
this  idea  is  evidently  that  the  enjoyment  of  property  is  made 
possible  by  the  State  —  that  there  is  a  value  created  and  main- 
tained by  the  community,  which  is  justly  called  upon  to  meet 
community  expenses.  Now,  of  what  values  is  this  true?  Only 
of  the  value  of  land.  This  is  a  value  that  does  not  arise  until 
a  community  is  formed,  and  that,  unlike  other  values,  grows 
with  the  growth  of  the  community.  It  exists  only  as  the  com- 
munity exists.  Scatter  again  the  largest  community,  and  land, 
now  so  valuable,  would  have  no  value  at  all.  With  every  in- 
crease of  population  the  value  of  land  rises ;  with  every  decrease 
it  falls.  This  is  true  of  nothing  else  save  of  things  which,  like 
the  ownership  of  land,  are  in  their  nature  monopolies. 

The  tax  upon  land  values  is,  therefore,  the  most  just  and 
equal  of  all  taxes.  It  falls  only  upon  those  who  receive  from 
society  a  peculiar  and  valuable  benefit,  and  upon  them  in  pro- 
portion to  the  benefit  they  receive.  It  is  the  taking  by  the  com- 
munity, for  the  use  of  the  community,  of  that  value  which  is 
the  creation  of  the  community.  It  is  the  application  of  the  com- 
mon property  to  common  uses.  When  all  rent  is  taken  by  tax- 
ation for  the  needs  of  the  community,  then  will  the  equality  or- 
dained by  Nature  be  attained.  No  citizen  will  have  an  advan- 
tage over  any  other  citizen  save  as  is  given  by  his  industry,  skill, 
and  intelligence;    and  each  will  obtain  what  he  fairly  earns. 


CHAPTER  VII 
Rev.  Edward  McGlynn,  1837-1900 

DR.  EDWARD  McGLYNN,  one  of  the  most  prominent 
supporters  of  the  new  movement  in  its  early  days,  was 
bom  of  Irish  parentage  in  New  York  City,  September  22, 
1837.    He  became  a  protege  of  Archbishop  Hughes,  who  sent 
him  to  the  College  of  the  Propaganda  in  Rome  to  be  educated 
for  the  priesthood.     He  distinguished  himself  as  a  student, 
and  at  the  age  of  twenty-two  was  ordained.    His  first  work 
in  the  ministry  was  as  assistant  pastor  to  Dr.  Cummings  at 
St.  Stephen's  Church  in  New  York  City.  Eight  years  later  he 
succeeded  Dr.  Cummings  as  pastor.    Of  fine  presence,  large 
in  heart  and  large  in  person,  he  won  the  love  and  esteem  of  his 
1,700  parishioners.     He  was  a  zealous  Catholic,  devoted  to 
the  spiritual  doctrines  of  his  church,  and  withal  a  man  of 
independent   thought  and   unbounded   courage— an   ardent 
American.     He  deserves  peculiar  honor,  not  because  of  origi- 
nal work,  but  because,  in  a  great  metropolis,  he  was  the  shep- 
herd of  a  great  flock  of  a  great  church,  who  stood  forth  like 
a  full-blown  radical  rose  in  a  great  garden  of  conservatism; 
and  because  he  presented  his  land  theory  for  final  decision 
with  a  completeness  of  doctrine  and  beauty  of  form  hardly 

to  be  excelled. 

Incidental  to  a  visit  of  Michael  Davitt  in  behalf  of  Irish 
land  reform,  and  under  the  spell  of  Progress  and  Poverty, 
Dr.  McGlynn  announced  himself  a  disciple  and  supporter  of 
American  land  reform.     Speaking  from  the  same  platform 

65 


4 


K  Hli 


pi 
If 


{■ 


i  '« 


66  The  Principles  of  Natural  Taxation 

with  Davitt,  he  proclaimed  the  righteousness  of  their  cause 
with  such  force  and  eloquence  that  Henry  George,  to  whom 
hitherto  he  had  been  unknown,  hailed  him  as  "  an  army  with 
banners,"  and  the  two  men  became  warm  friends.  A  brief 
five  years  later  Dr.  McGlynn,  standing  in  the  presence  of  a 
funeral  throng  of  10,000  in  and  out  of  the  Grand  Central 
Palace,  closed  his  eulogy  of  his  friend  with  the  impressive 
paraphrase :  "  There  was  a  man  sent  from  God  whose  name 
was  Henry  Greorge." 

The  work  of  Dr.  McGlynn  in  advancing  his  newly  espoused 
cause  is  important,  not  only  because  of  his  convincing  power 
as  a  thinker  and  orator,  but  also  because  he  brought  the  sub- 
ject to  the  attention  of  the  authorities  of  his  church  in  a  way 
to  compel  their  judgment  upon  the  taxation  of  economic  rent 

as  a  moral  issue. 

The  circumstances  were  these.  Because  of  his  public  utter- 
ances in  behalf  of  the  "single  tax"  at  the  time  of  the  Land 
League  agitation,  in  1882,  and  in  1886  in  the  mayoralty  cam- 
paign in  which  Henry  George,  Abram  Hewitt,  and  Theodore 
Roosevelt  were  candidates.  Dr.  McGlynn  became  involved  in 
a  controversy,  now  historic,  with  his  ecclesiastical  superiors. 
The  initial  issue  was  one  of  church  discipline,  rather  than  of 
the  truth  of  an  economic  tenet.  The  situation  was  aggravated 
by  lack  of  temperance  among  some  of  the  parties,  so  that  it 
finally  resulted  in  Dr.  McGlynn's  excommunication,  a  griev- 
ance to  his  many  friends  both  in  and  out  of  the  Catholic 
church.  Among  these  a  fellow-priest,  Mgr.  Burtsell  of  Rond- 
out.  New  York,  was,  throughout  the  controversy,  counsel  for 
Dr.  McGlynn,  interesting  himself  in  the  exoneration  of  his 
friend.  The  interests  of  the  Vatican  in  this  country  were  at 
that  time  in  the  hands  of  Monsignor  Satolli,  resident  ablegate, 
one  of  whose  important  charges  was  to  bring  to  a  satisfac- 


Rev.  Edward  McGlynn,  1837-1900 


67 


tory  conclusion  what  was  then  known  as  the  McGlynn  con- 
troversy. 

Monsignor  Satolli  in  a  former  visit  to  the  United  States 
in  1889,  and  as  the  guest  of  Archbishop  Corrigan,  had  ample 
opportunity  for  investigation  of  the  land  question  from  the 
viewpoint  of  the  United  States  and  of  Rome.  Hence  he  had 
four  years  of  time  in  which  he  might  have  made  a  prelimi- 
nary examination.  He  was  credited  with  having  been  one  of 
those  consulted  when  the  Pope's  encyclical,  Rerum  Nova- 
rum,  of  May  14,  1891,  was  in  preparation,  and  was  thereby 
the  better  able  to  judge  what  was  in  accord  or  in  conflict 
with  it. 

Dr.  McGlynn,  at  the  request  of  the  Apostolic  Delegate, 
submitted  to  him,  through  his  counsel,  a  statement  in  Italian, 
expressing  his  views  on  the  subjects  of  private  property  in  land 
and  the  taxation  of  economic  rent.  On  this  statement  Mon- 
signor Satolli  consulted  four  of  the  professors  of  the  Catholic 
University.  The  decision  of  Monsignor  Satolli  that  there  was 
nothing  contrary  to  Catholic  doctrine  in  the  opinions  of 
Dr.  McGlynn  as  exhibited  in  that  statement  was  official, 
and  was  followed  by  the  return  of  Dr.  McGlynn  to  active 
duty  at  Newburgh,  New  York,  where  he  died,  January  7, 

1900. 

In  the  teachings  of  the  Catholic  church,  notably  in  the 
encyclical  of  Pope  Leo  xiii  on  the  Condition  of  Labor,  1892, 
the  Pope  carefully  reiterated  the  law  of  the  church  in  this 
comprehensive  sentence : 

The  right  to  possess  property  is  from  nature,  not  from  man ; 
and  the  State  has  only  the  right  to  regulate  its  use  in  the  inter- 
ests of  the  public  good,  but  by  no  means  to  abolish  the  right  to 
possess  it  altogether.  The  State  is,  therefore,  unjust  and  cruel, 
if,  in  the  name  of  taxation,  it  deprives  the  private  owner  of  more 
than  is  just. 


>.;. 


68  The  Principles  of  Natural  Taxation 

The  reinstatement  of  Dr.  McGlynn  would  thus  imply  that 
if  the  single  tax  could  be  shown  to  be  just,  it  would  not  be  a 
contravention  of  the  ethical  teachings  of  the  Catholic  church. 

It  is  somewhat  curious  to  note  that  whether  or  not  it  was 
his  ecclesiastical  fire  that  burned  the  error  out  of  his  mind, 
in  Dr.  McGlynn's  statement  of  economic  belief  upon  which  he 
was  restored  to  his  priestly  functions  there  is  not  a  hint  of  the 
abolition  of  the  institution  of  private  ownership  or  estate  in 
land,  or  of  the  equal  right  of  all  men  to  the  ownership  of  land. 
The  one  thing  prominent  was  the  simple  tenet  of  the  right  of 
all  men  to  the  rent  of  land.  Dr.  McGlynn  disavowed  to  his 
ecclesiastical  superiors  the  error  which  they  combated — the 
abolition  of  private  property  in  land  — and  they  yielded  to 
him  his  economic  conviction,  refined  by  his  own  masterly 
hand,  of  the  right  of  all  men  to  the  rental  value  of  land. 

If  the  foregoing  is  true,  then  the  McGlynn  adjustment, 
instead  of  being  a  surrender  on  the  part  of  the  church,  was  a 
distinct  step  in  economic  advance,  and  all  the  harsh  misrepre- 
sentations and  disputes  over  this  unfortunate  incident  are  seen 
to  have  been  worse  than  a  waste  of  words  — a  sorry  detriment 

to  a  sacred  cause. 

The  episode  of  Henry  George's  open  letter  to  Pope  Leo 
XIII,  which  presumed  upon  the  Pope's  hostility  to  the  single- 
tax  doctrine,  proved  a  most  disturbing  element  in  the  progress 
of  that  cause,  and  has  so  continued  for  the  quarter  of  a  century 
that  has  intervened.  Fresh  reference  to  this  incident  is  justified 
by  the  fact  that  this  mistake  of  Henry  George's,  which  he 
frankly  confessed  and  did  his  best  to  correct,  was  the  same 
mistake  which  many  of  his  devoted  followers  have  thought- 
lessly sanctioned,  and  still  persist  in  prolonging  and  aggravat- 
ing without,  like  him,  confessing  their  sins.  The  blemish  of 
an  ex-parte  judgment  upon  a  great  reputation  is  as  nothing 


Rev.  Edward  McGlynn,  1837-1900  ^ 

compared  with  the  vindication  of  a  great  cause.  The  present 
occasion,  late  though  it  be,  is  the  proper  time  to  establish,  in 
harmony  with  succeeding  events,  the  main  facts  in  the  case. 

The  following  excerpts  from  letters  from  Dr.  McGlynn's 
ecclesiastical  counsel,  Mgr.  Burtsell,  February  15  to  March  6, 
1909,  are  self-explanatory,  and  corroborate  the  truth  of  the 
situation : 

Dear  Mr.  Fillebrown  : 

....  I  told  Henry  George  that  he  had  made  a  mistake  in 
writing  his  letter  to  Pope  Leo  xiii,  as  if  he  opposed  his  theory 
he  should  have  used  the  many  parts  of  that  Encyclical  of  Leo  xiii 
that  laid  the  foundation  for  the  single-tax  theory  without  antago- 
nizing any  part  of  it.  Once  Henry  George  openly  said  that  he 
found  opposition  to  his  theory  in  the  Encyclical,  Catholics,  espe- 
cially bishops,  would  presume  against  Henry  George,  even  where 
the  questions  were  not  within  the  domain  of  faith,  and  would  be 
loath  to  openly  adopt  the  theory  even  if  it  appeared  plausible. 
I  told  him  that  his  letter  would  always  injure  his  influence  among 
Catholics.  He  frankly  acknowledged  that  he  had  committed  a 
tactical  mistake  at  least  — as  he  said  that  even  in  questions  of 
political  economy  the  presumption  would  be  that  the  Pope  with 
all  his  counsellors  would  be  wiser  than  he,  and  as  he  himself  had 
declared  that  he  had  found  the  postulates  for  his  theory  in  that 
Encyclical,  he  should  have  utilized  them  for  the  upbuilding  of 
his  theory,  instead  of  appearing  to  find  obstacles  to  it.  •  ^.  •  • 

Dr.  McGlynn  from  the  beginning  interpreted  Leo  xin's  Encyc- 
lical on  Labor  as  in  full  conformity  with  the  principles  of  the 

sin^fle  tax. 

Archbishop  Corrigan  from  the  Cathedral  pulpit  personally 
explained  that  the  Encyclical  Rerum  Novarum  had  in  clear  view 
condemned  Henry  George's  and  Dr.  McGlynn's  land  theory,  as 
a  part  of  socialism.  This  was  really  the  occasion  of  Henry 
George's  reply  to  Pope  Leo  xiii.  I  published  in  the  New  York 
Sun  in  January,  1893,  the  English  translation  of  my  Latin  pres- 
entation of  the  theory  to  Mgr.  Satolli,  which  was  the  first 
presentation  accepted  by  him  and  the  professors  of  the  Catholic 
University.    Then  I  suggested  to  Henry  George  to  write  to  the 


70  The  Principles  of  Natural  Taxation 

New  York  Sun  what  he  thought  of  my  presentation,  and  to  recall 
his  opposition  to  Leo  xiii's  Encyclical.  This  letter  was  pub- 
lished in  the  Sun  in  January,  1893,  wherein  Mr.  George  expressed 
his  approval  of  the  presentation,  and  stated  that  he  had  been 
misled  into  his  reply  to  Leo  xiii  by  Archbishop  Corrigan's  inter- 
pretation, and  that  he  now  regretted  his  criticism  because  he 
found  really  the  postulates  necessary  for  his  theory  in  that  Encyc- 
lical, with  which  Mgr.  SatoUi  had  found  my  presentation  (as  he 

had  Dr.  McGlynn's)  to  be  in  accord 

I  have  just  read  in  The  Life  of  Henry  George,  by  his  son 
(pp.  560-566),  a  fair  account  of  what  I  stated  above,  with  quota- 
tion of  one  letter  [New  York  Sun\. 

Very  sincerely  yours, 

(Sd.)    R.  L.  BURTSELL. 

In  a  later  letter  Mgr.  Burtsell  suggested  the  following, 
which  appears  as  a  footnote  in  The  A  B  C  of  Taxation, 
p.  104: 

Henry  George,  in  his  Open  Letter  to  the  Pope,  apparently  did 
not  advert  to  these  words,  ''more  than  is  just,"  and  hence  his 
reasoning  is  open  to  the  charge  of  lacking  that  complete  justice 
which  was  his  highest  aim. 

Dr.  McGlynn  was  Henry  George's  great  and  powerful 
coadjutor  in  bringing  to  men's  minds  the  broad  general  truths 
involved  in  the  nature  of  economic  rent  and  its  taxation. 
Neither  of  them  concerned  himself  with  specific  ways  and 
means.  Neither  thought  of  interpreting  the  statement  that  all 
ground  rent  ought  to  be  taken  for  public  use  to  mean  that  the 
whole  of  it  ought  to  be  taken  and  at  once,  but  both,  recogniz- 
ing that  a  right  thing  may  be  done  in  a  wrong  way,  insisted 
that  a  right  way  ought  to  be  found  to  do  a  thing  that  ought 
to  be  done. 

The  following  English  version  of  the  document  presented 
to  Monsignor  Satolli  by  Dr.  McGlynn  in  December,  1892  — 


Rev.  Edward  McGlynn,  1837-1900 


71 


and  by  his  direction  examined  by  a  committee  of  the  professors 
of  the  Catholic  University,  at  Washington,  D.C.,  and  declared 
to  contain  nothing  contrary  to  Catholic  teaching — will  stand 
as  a  monument  to  the  catholicity  of  the  Catholic  church. 

All  men  are  endowed  by  the  law  of  nature  with  the  right  to 
life  and  to  the  pursuit  of  happiness,  and  therefore  with  the  right 
to  exert  their  energies  upon  those  natural  bounties  without  which 
labor  or  life  is  impossible. 

God  has  granted  those  natural  bounties,  that  is  to  say,  the 
earth,  to  mankind  in  general,  so  that  no  part  of  it  has  been 
assigned  to  anyone  in  particular,  and  so  that  the  limits  of  private 
possession  have  been  left  to  be  fixed  by  man's  own  industry  and 
the  laws  of  individual  peoples. 

But  it  is  a  necessary  part  of  the  liberty  and  dignity  of  man 
that  man  should  own  himself,  always,  of  course,  with  perfect 
subjection  to  the  moral  law.  Therefore,  besides  the  common 
right  to  natural  bounties,  there  must  be  by  the  law  of  nature 
private  property  and  dominion  in  the  fruits  of  industry  or  in 
what  is  produced  by  labor  out  of  those  natural  bounties  to  which 
the  individual  may  have  legitimate  access,  that  is,  so  far  as  he 
does  not  infringe  the  equal  right  of  others  or  the  common  rights. 

It  is  a  chief  function  of  civil  government  to  maintain  equally 
sacred  these  two  natural  rights. 

It  is  lawful,  and  it  is  for  the  best  interests  of  the  individual 
and  of  the  community,  and  necessary  for  civilization,  that  there 
should  be  a  division  as  to  the  use  and  an  undisturbed,  permanent, 
exclusive  private  possession  of  portions  of  the  natural  bounties, 
or  of  the  land ;  in  fact,  such  exclusive  possession  is  necessary  to 
the  ownership,  use,  and  enjoyment  by  the  individual  of  the  fruits 
and  products  of  his  industry. 

But  the  organized  community  through  civil  government  must 
always  maintain  the  dominion  over  those  natural  bounties,  as 
distinct  from  the  products  of  private  industry  and  from  that 
private  possession  of  the  land  which  is  necessary  for  their  enjoy- 
ment. The  maintenance  of  this  dominion  over  the  natural  boun- 
ties is  a  primary  function  and  duty  of  the  organized  community, 
in  order  to  maintain  the  equal  right  of  all  men  to  labor  for  their 
living  and  for  the  pursuit  of  happiness,  and  therefore  their  equal 
right  of  access  directly  or  indirectly  to  natural  bounties.     The 


72  The  Principles  of  Natural  Taxation 

assertion  of  this  dominion  by  civil  government  is  especially  neces- 
sary, because,  with  the  very  beginning  of  civil  government  and 
with  the  growth  of  civilization,  there  comes  to  the  natural  boun- 
ties, or  the  land,  a  peculiar  and  an  increasing  value  distinct  from 
and  irrespective  of  the  products  of  private  industry  existing 
therein.  This  value  is  not  produced  by  the  industry  of  the  pri- 
vate possessor  or  proprietor,  but  is  produced  by  the  existence  of 
the  community,  and  grows  with  the  growth  and  civilization  of  the 
community.  It  is  therefore  called  unearned  increment.  It  is 
this  unearned  increment  that  in  cities  gives  to  lands  without  any 
improvements  so  great  a  value.  This  value  represents  and  meas- 
ures the  advantages  and  opportunities  produced  by  the  commu- 
nity, and  men,  when  not  permitted  to  acquire  the  absolute 
dominion  over  such  lands,  will  willingly  pay  the  value  of  this 
unearned  increment  in  the  form  of  rents,  just  as  men,  when  not 
permitted  to  own  other  men,  will  willingly  pay  wages  for  desired 

services. 

No  sooner  does  the  organized  community,  or  state,  arise, 
than  it  needs  revenues.  This  need  for  revenues  is  small  at  first 
while  population  is  sparse,  industry  rude,  and  the  functions  of 
the  State  few  and  simple,  but  with  growth  of  population  and 
advance  of  civilization  the  functions  of  the  State  increase  and 
larger  and  larger  revenues  are  needed.  God  is  the  author  of 
society  and  has  pre-ordained  civilization.  The  increasing  need 
for  public  revenues  with  social  advance  being  a  natural,  God- 
ordained  need,  there  must  be  a  right  way  of  raising  them  — some 
way  that  we  can  truly  say  is  the  way  intended  by  God.  It  is 
clear  that  this  right  way  of  raising  public  revenues  must  accord 
with  the  moral  law  or  the  law  of  justice.  It  must  not  conflict 
with  individual  rights ;  it  must  find  its  means  in  common  rights 
and  common  duties.  By  a  beautiful  providence,  that  may  be 
truly  called  divine,  since  it  is  founded  upon  the  nature  of  things 
and  the  nature  of  man,  of  which  God  is  the  creator,  a  fund, 
constantlv  increasing  with  the  capacities  and  needs  of  society, 
is  produced  by  the  very  growth  of  society  itself,  namely,  the 
rental  value  of  the  natural  bounties  of  which  society  retains 
dominion.  The  justice  and  the  duty  of  appropriating  this  fund 
to  public  uses  is  apparent  in  that  it  takes  nothing  from  the  pri- 
vate property  of  individuals  except  what  they  will  pay  willingly 
as  an  equivalent  for  a  value  produced  by  the  community,  which 
they  are  permitted  to  enjoy.    The  fund  thus  created  is  clearly  by 


Rev.  Edward  McGlynn,  1837-1900 


73 


the  law  of  justice  a  public  fund,  not  merely  because  the  value  is 
a  growth  that  comes  to  the  natural  bounties  which  God  gave  to 
the  community  in  the  beginning,  but  also,  and  much  more,  be- 
cause it  is  a  value  produced  by  the  community  itself,  so  that  this 
rental  value  belongs  to  the  community  by  that  best  of  titles, 
namely,  producing,  making,  or  creating. 

To  permit  any  portion  of  this  public  property  to  go  into 
private  pockets,  without  a  perfect  equivalent  being  paid  into  the 
public  treasury,  would  be  an  injustice  to  the  community.  There- 
fore the  whole  rental  fund  should  be  appropriated  to  common  or 
public  uses. 

This  rental  tax  will  make  compulsory  the  adequate  utilization 
of  natural  bounties  exactly  in  proportion  to  the  growth  of  the 
community  and  of  civilization,  and  will  thus  compel  the  possessors 
to  employ  labor,  the  demand  for  which  will  enable  the  laborer  to 
obtain  perfectly  just  wages.  The  rental  tax  fund,  growing  by 
a  natural  law  proportionately  with  the  growth  of  civilization,  will 
thus  be  sufficient  for  public  needs  and  capacities,  and  therefore 
all  taxes  upon  industry  and  upon  the  products  of  industry  may 
and  should  be  abolished.  While  the  tax  on  land  values  promotes 
industry,  and  therefore  increases  private  wealth,  taxes  upon  in- 
dustry act  like  a  fine  or  a  punishment  inflicted  upon  industry  — 
they  impede  and  restrain  and  finally  strangle  it. 

In  the  desired  condition  of  things  land  would  be  left  in  the 
private  possession  of  individuals,  with  full  liberty  on  their  part 
to  give,  sell,  or  bequeath  it,  while  the  State  would  levy  on  it  for 
public  uses  a  tax  that  should  equal  the  annual  value  of  the  land 
itself,  irrespective  of  the  use  made  of  it  or  the  improvements  on  it. 

The  only  utility  of  private  ownership  and  dominion  of  land, 
as  distinguished  from  possession,  is  the  evil  utility  of  giving  to 
the  owners  the  power  to  reap  where  they  have  not  sown,  to  take 
the  products  of  the  labor  of  others  without  giving  them  an  equiva- 
lent—  the  power  to  impoverish  and  practically  to  reduce  to  a 
species  of  slavery  the  masses  of  men,  who  are  compelled  to  pay 
to  private  owners  the  greater  part  of  what  they  produce  for  per- 
mission to  live  and  to  labor  in  this  world,  when  they  would  work 
upon  the  natural  bounties  for  their  own  account,  and  the  power, 
when  men  work  for  wages,  to  compel  them  to  compete  against  one 
another  for  the  opportunity  to  labor,  and  to  compel  them  to  con- 
sent to  labor  for  the  lowest  possible  wages  —  wages  that  are  by 
no  means  the  equivalent  of  the  new  value  created  by  the  work 


74  The  Principles  of  Natural  Taxation 

of  the  laborer,  but  are  barely  sufficient  to  maintain  the  laborer 
in  a  miserable  existence,  and  even  the  power  to  deny  to  the 
laborer  the  opportunity  to  labor  at  all.  This  is  an  injustice 
against  the  equal  right  of  all  men  to  life  and  to  the  pursuit  of 
happiness,  a  right  based  upon  the  brotherhood  of  man  which  is 
derived  from  the  fatherhood  of  God.  This  is  the  injustice  that 
we  would  abolish  in  order  to  abolish  involuntary  poverty. 

That  the  appropriation  of  the  rental  value  of  land  to  public 
uses  in  the  form  of  a  tax  would  abolish  the  injustice  which  has 
just  been  described,  and  thus  abolish  involuntary  poverty,  is 
clear;  since  in  such  case  no  one  would  hold  lands  except  for 
use,  and  the  masses  of  men,  having  free  access  to  unoccupied 
lands,  would  be  able  to  exert  their  labor  directly  upon  natural 
bounties  and  to  enjoy  the  full  fruits  and  products  of  their  labors, 
beginning  to  pay  a  portion  of  the  fruits  of  their  industry  to  the 
public  treasury  only  when,  with  the  growth  of  the  community 
and  the  extension  to  them  of  the  benefits  of  civilization,  there 
would  come  to  their  lands  a  rental  value  distinct  from  the  value 
of  the  products  of  their  industry,  which  value  they  would  will- 
ingly pay  as  the  exact  equivalent  of  the  new  advantages  coming 
to  them  from  the  community ;  and  again  in  such  case  men  would 
not  be  compelled  to  work  for  employers  for  wages  less  than  abso- 
lutely just  wages,  namely,  the  equivalent  of  the  new  value  created 
by  their  labor ;  since  men  surely  would  not  consent  to  work  for 
unjust  wages  when  they  could  obtain  perfectly  just  wages  by 
working  for  themselves ;  and,  finally,  since,  when  what  belongs 
to  the  community  shall  have  been  given  to  the  community,  the 
only  valuable  things  that  men  shall  own  as  private  property 
will  be  those  things  that  have  been  produced  by  private  industry, 
the  boundless  desires  and  capacities  of  civilized  human  nature 
for  good  things  will  always  create  a  demand  for  these  good 
things,  namely,  the  products  of  labor  — a  demand  always  greater 
than  the  supply ;  and  therefore  for  the  labor  that  produces  these 
good  things  there  will  always  be  a  demand  greater  than  the 
supply,  and  the  laborer  will  be  able  to  command  perfectly  just 
wages  —  which  are  a  perfect  equivalent  in  the  product  of  some 
other  person's  labor  for  the  new  value  which  his  own  labor 
produces. 


THOMAS  G.  SHEARMAN 
I 834- I 900 


II X 


CHAPTER  VIII 
Thomas  G.  Shearman,  1834-1900 

HAVING  occasion  to  scan  the  latest  volumes  on  political 
economy,  the  authorities  of  the  colleges  and  universities 
of  the  United  States  and  Canada,  in  order  to  note  how 
much  economic  importance  is  therein  attached  to  the  taxation 
of  land  values,  I  found  myself  confronted  by  more  than 

one  surprise. 

( 1 )  Almost  the  only  name  connected  by  these  writers  with 
the  reform  as  originator  and  interpreter  and  commentator  is 

li  that  of  Henry  George.  The  chief  and  more  numerous  criti- 
cisms pertain,  not  to  the  principles  of  a  scientific  taxation  for 
which  Henry  George  stood,  but  are  centered  upon  the  gratu- 
itous and  fallacious  charge  that  the  burden  of  his  message  to 
the  world  was  confiscation  of  property  and  the  overturn  of 
civilization. 

This  way  of  handling  the  subject  during  the  past  thirty 
years  has  shown  little  gain  for  either  professors  or  for  tax 
reform,  and  I  have  come  to  realize  that  this  poverty  of  method 
amounts  to  an  educational  abnormity  if  not  deformity. 

(2)  I  was  surprised  to  note  that  in  all  these  volumes  no 
room  was  found  for  the  name  and  dictum  of  Mr.  Thomas  G. 
Shearman,  a  man  who,  in  addition  to  his  general  reputation  as 
an  authority  on  whatever  subject  he  touched,  was  a  sounder, 
safer,  and  more  thorough  student  and  expositor  of  the  princi- 

7S 


76 


The  Principles  of  Natural  Taxation 


') 


i; 


•If 


pies  of  taxation  than  any  other  person  who  has  spoken  from 
the  single-tax  standpoint.  Yet  no  economist  appears  to  have 
made  so  much  as  a  pretense  of  answering  his  argument.  That 
his  taxation  work,  which  was  the  particular  pride  of  his  life, 
should  have  been  unchronicled  in  the  economic  annals  of  his 
generation,  seems  almost  incredible,  and  yet,  mirabile  dictu, 
in  eleven  of  the  volumes  on  political  economy  that  span  the 
economic  firmament,  the  name  of  Thomas  G.  Shearman  is 
not  indexed,  while  four  have  half  a  dozen  references  or  cita- 
tions, none  of  which  deal  with  the  principle  of  land-values 
taxation.  This  complete  ignoring  of  a  leading  authority  can 
be  explained  only  upon  the  theory  that  his  plan  of  tax  reform 
is  thought  to  be  of  no  consequence. 

Under  these  circumstances  I  cannot  forbear  to  make  an 
earnest  request  of  the  professors  that  they  will  reopen  the 
case,  "/n  re  Natural  Taxation,"  according  to  Thomas  G. 
Shearman,  and  allow  it  to  be  reargued  before  a  fresh  bench 
and  jury,  thus  giving  him  a  fraction  of  the  thirty  years* 
innings  that  have  been  accorded  to  Henry  George. 

To  extol  the  excellences  of  Mr.  Shearman  by  no  means 
implies  detraction  from  the  achievements  of  Mr.  George.  In 
a  dozen  volumes  of  reform  literature,  resplendent  with  illustra- 
tion, Mr.  George  essayed,  with  his  five  main  divisions  and 
sixty- four  subdivisions,  to  sweep  the  whole  field  of  political 
economy.  He  compassed  the  gamut  of  human  emotions.  He 
argued  de  novo  for  the  abstract  rights  of  man,  equal,  natural, 
original,  and  inherent;  and  in  support  of  his  thesis  he  mar- 
shaled in  stately  array  the  moral,  philosophical,  and  religious 
sentiments  of  mankind. 

Mr.  Shearman  was  not  a  man  of  hobbies.  His  taxation 
work  he  regarded  as  by  far  his  best  investment  for  the  in- 
terest of  his  fellow-men.    Here  are  his  own  words : 


Thomas  G.  Shearman,  1834-1900 


77 


I  do  not  estimate  very  highly  the  value  of  my  own  work  in 
any  direction,  in  business,  in  the  church,  or  in  public  affairs.  But 
I  can  see  more  substantial  fruit  of  my  efforts  in  the  direction  of 
a  higher  development  of  humanity  through  the  reform  of  taxation 
than  in  any  other  direction  whatever.  Obscure  as  my  work  has 
been,  ....  it  has  marked  a  channel  in  which  an  ever-swelling 

tide  of  human  energy  will  flow It  has  given  a  direction  to 

the  spirit  of  reform  which  will  insure  great  results  after  I  have 
left  the  work  forever. 

In  a  single  book.  Natural  Taxation,  a  volume  of  scientific, 
prose  reasoning,  he  supplemented  George's  eloquent  exhibit 
with  the  cold  and  exact  statement  of  an  energizing,  enacting 
clause  without  which  no  reform  can  be  made  operative.  He 
set  out  to  elaborate  the  special  economic  advantage  of  a  natural 
tax,  and  followed  with  wonderfully  clear  deductions  as  to  its 
effects.  Mr.  George  made  small  pretense  to  calculation  of  the 
volume  of  economic  rent,  and  attempted  little  illustration  of 
that  feature  of  his  subject.  For  himself  he  said:  "What  I 
have  endeavored  to  do  is  to  establish  general  principles,  trust- 
ing to  my  readers  to  carry  further  their  application  where  this 
is  needed."  Mr.  Shearman,  who  wrote  a  dozen  years  later, 
and  who  reveled  in  their  application,  as  well  as  in  the  principles 
themselves,  labored  with  almost  infinite  pains  to  collect  data 
and  frame  reliable  estimates  of  the  volume  of  rents  such  as 
have  not  been  superseded,  because  no  one  has  been  found  with 
faculty  and  patience  to  bring  these  calculations  down  to  date. 
Meantime  events  have  very  largely  verified  the  proportion,  and 
hence  the  substantial  accuracy  of  his  calculations.  In  view 
of  his  admitted  thoroughness  we  may  be  assured  that  his 
opinions  deserve  respect.  He  was  a  judge  who  could  be 
trusted  to  let  complete  evidence  and  full  consideration  precede 
his  decision. 

Economists,  especially  the  professionals,  sometimes  have 


'ID 


78  The  Principles  of  Natural  Taxation 

been  sharply  criticized  for  not  enrolling  themselves  under  the 
banner  of  Henry  George.  If  such  an  enrolment  meant  a  com- 
mitment simply  to  his  tenet  of  the  single  tax,  harmonization 
might  not  be  despaired  of,  but  if  such  an  enrolment  were  to 
commit  them  by  implication  to  others  of  his  remaining  sixty- 
three  economic  tenets,  it  is  easy  to  see  how  their  difficulties  are 
multiplied  many  fold,  a  complication  which  in  their  frank 
opinion  even  the  justice  of  the  situation  does  not  demand. 

It  is  probably  true  that  the  professors  as  a  body  are  far 
from  agreeing  with  Mr.  George  in  his  general  theory  of  pro- 
duction and  distribution,  while  in  "  beating  together  the  ample 
field  "  of  political  economy  in  the  large,  there  would  be  the 
certainty  of  collisions  without  number.  Very  many  economists 
incline  with  favor  to  Henry  George  as  to  his  land-value  tax, 
but  with  the  jealous  reservation  of  differing  with  him  upon 
many  of  his  other  contentions.  One  would  naturally  think 
that  upon  Mr.  Shearman,  with  his  one  platform  and  one 
plank,  the  professors  might  unite  without  hazard  to  inherited 
dogma  on  the  one  hand,  or  risk  of  speculative  heresy  on  the 

other. 

Disregarding  the  voluminous  moralizations  (the  basis  of 
much  obstructive  argumentation  even  among  those  who  do  not 
differ),  Mr.  Shearman,  like  Mr.  George,  buried  his  lance 
directly  in  the  heart  of  the  social  problem.  Without  convoy- 
ing his  disciples  through  the  wilderness  of  three  or  six  thou- 
sand years  of  wandering  thought,  he  reached  the  Henry 
George  goal  by  a  simple  scientific  route. 

Perhaps  nothing  could  add  more  weight  and  dignity  to 
the  reasonableness  of  this  humble  petition  than  to  recall  some- 
thing of  the  gifts  and  accomplishments  of  Shearman,  the  pub- 
licist, philanthropist,  and  religionist,  whose  economic  prestige 
can  never  be  dimmed. 


Thomas  G.  Shearman,  1834-1900 


79 


At  the  memorial  services  in  Plymouth  Church  his  luminous 
characteristics  were  assembled  in  bold  relief  by  various 
speakers. 

His  pastor.  Rev.  Newell  Dwight  Hillis,  said  of  him  that— ^ 

out  of  a  passionate  love  for  his  fellows  he  tried  to  turn  the  prin- 
ciples of  Jesus  Christ  into  the  writings  and  practice  of  a  great 

lawyer This    great    church    has    had    heroes  —  in    Mr. 

Beecher,  the  greatest  preacher  of  the  love  of  God  that  the  world 
has  seen  since  the  Christian  era  began,  and  in  Mr.  Shearman 

another One  of  the  strongest,  best,  and  bravest  men  of 

his  generation  that  this  country  has  produced During  the 

forty  years  of  his  career  he  appeared  upon  the  platform  over 
seven  hundred  times  to  urge  the  rights  of  the  black  man,  the 
Indian,  the  Armenian,  and  the  poor  and  despised  of  every  city 
and  nation. 

Mr.  Shearman  was  born  November  25,  1834,  in  Birming- 
ham, England,  of  English  parents.  His  father  was  a  versatile 
man,  in  turn  physician,  writer,  and  preacher.  Denomination- 
ally a  Baptist,  he  was  a  great  student  of  the  Bible,  and  a  great 
reader  and  lover  of  Shakespeare.  What  education  Mr.  Shear- 
man had  was  the  work  of  a  gifted  mother,  a  teacher  of  prac- 
tical excellence  both  abroad  and  at  home.  A  copy  of  the  New 
Testament  is  treasured  in  which  he  read  at  the  age  of  four. 

Through  lack  of  family  fortune  he  was  early  thrown  on 
his  own  resources,  and,  as  Dr.  Hillis  continues  — 

mainly  self-educated  and  self-made,  his  intellect  was  hammered 

out  upon  the  anvil  of  adversity At  twelve  he  was  out  in 

the  world  for  himself.  At  thirteen  his  school  days  ended  forever. 
At  fourteen  he  entered  an  office,  where  he  received  apprentice's 
wages  of  $1.00  a  week  for  the  first  year  and  $1.50  for  the  second. 
....  Fifteen  years  found  him  deliberately  fashioning  his  Eng- 
lish style  upon  Bunyan  for  simplicity,  Baxter  for  unity  and  orderly 
movement,  and  Macaulay  for  picturesque  narration.  ....  At 
thirty-one  he  was  identifying  and  tabulating  out  of  his  own 
unaided  memory  over  seven  hundred  court  cases When 


♦ 


I 


s 


II 


80  The  Principles  of  Natural  Taxation 

in  1875  the  great  storm  burst  upon  Mr.  Beecher  he  urged  his 
pastor  to  devote  himself  to  his  regular  work,  took  all  responsi- 
bility upon  himself,  practically  retired  from  his  law  practice,  and 
out  of  his  own  fortune  anticipated  all  expenses  for  the  great  trial, 
until  he  had  advanced  over  $70,000  of  his  own  money,  for  which, 
however,  he  was  afterwards  reimbursed. 

Nothing  could  account  for  a  personal  devotion  like  this  ex- 
cept the  fact  that  Mr.  Shearman  believed  in  Mr.  Beecher. 
Dr.  Hillis,  in  cataloguing  Mr.  Shearman's  gifts,  said:  He 
had  a  strong  intellect,  great  analytic  skill,  memory,  sound 
judgment,  fidelity  to  conviction,  courage  unyielding  and  all- 
conquering,  frankness  to  friend  and  foe,  moral  earnestness, 
sympathy,  enthusiasm,  thoroughness,  and  a  steadfastness  that 
never  was  defeated.  Although  he  had  no  diplomacy  and  little 
tact,  he  was  great  notwithstanding. 

Mr.  Rossiter  W.  Raymond,  superintendent  of  Plymouth 
Sunday  School,  gave  two  side-glimpses  of  Mr.  Shearman. 
One  picture  shows  him  on  the  way  to  a  Plymouth  Sunday 
School  picnic,  sitting  on  the  deck  of  the  steamer,  himself 
childless,  covered  with  children  who  hang  on  his  shoulders 
and  arms  while  he  tells  them  fairy  stories;  the  other,  at  a 
Coney  Island  outing  of  the  little  ones  in  which  he  took  part. 

There  he  lies  on  the  sands  while  they  cover  him  like  flies, 
and  when  they  want  to  wade  in  the  water,  and  he  is  afraid  to 
let  them  go  in  alone,  the  great  lawyer,  the  friend  of  Henry  Ward 
Beecher,  the  Political  Economist,  the  Superintendent  of  Plymouth 
Sunday  School,  takes  off  his  shoes  and  stockings,  rolls  up  his 
trousers,  and,  clasping  hands  with  a  chain  of  merry  boys  and 
girls,  wades  out  into  the  surf.  Mr.  Shearman's  love  for  the  chil- 
dren, and  the  children's  love  for  him,  tell  the  story  of  his  real 
character. 

According  to  Mr.  Raymond,  who  was  privileged  to  be  the 
only  layman  intimately  and  constantly  associated  with  the  great 


Thomas  G.  Shearman,  1834-1900 


81 


lawyers  who  defended  Mr.  Beecher,  "All  of  these  men 
gave  their  services  at  great  pecuniary  sacrifice,  in  aid  of  a 
righteous  man  unjustly  accused."  Neither  Mr.  Shearman, 
who  did  more  than  all  the  others,  nor  his  partner,  Mr.  Sterling, 
who  shared  in  the  deprivation  of  his  services  at  great  sacrifice 
to  their  general  business,  would  accept  anything.  To  this 
testimony  may  be  added  that  of  an  intimate  co-worker :  "  His 
life  taught  a  larger  lesson,  the  lesson  of  constant  and  willing 
giving.  I  never  knew  a  man  who,  on  the  whole,  was  so  be- 
nevolent with  his  purse."  In  a  life  abounding  with  ceaseless 
benefactions,  Mrs.  Shearman,,  who  survives  him,  is  daily  exe- 
cuting his  will. 

Stephen  V.  White,  deacon  of  Plymouth  Church,  a  lead- 
ing broker  and  later  a  member  of  Congress,  then  associated 
"very,  very  largely  and  very,  very  closely  in  business  and  in 
consultation  wdth  Mr.  Shearman  for  thirty  years,"  bore  this 
enthusiastic  testimony : 

I  consider  his  character  and  his  career  the  most  unique  char- 
acter and  the  most  unique  career  of  any  man  whom  I  ever  kne\y, 

or  of  any  man  of  whom  I  have  read By  reason  of  his 

remarkable  faculty  for  generalization  and  collaboration,  he  was 
enabled  in  a  few  months  to  become  a  walking  digest  of  the  deci- 
sions and  statutes  of  the  state  of  New  York.  In  1857  Mr.  Shear- 
man was  appointed  one  of  a  committee  to  codify  the  statute  laws 
of  the  State  of  New  York.  The  chairman,  David  Dudley  Field, 
"lion  of  the  bar  of  the  city  and  of  the  country,"  being  too  busy 
to  give  his  personal  attention  to  the  work  of  the  committee, 
arranged  with  Mr.  Shearman  to  pay  him  $2,500  for  what  time 
he  could  spare  without  neglect  of  his  own  clients,  and  inside  of 
a  year  a  report  was  sent  to  the  Legislature  by  this  commission 
in  a  book  of  forms  embracing  273  pages  in  which  every  stroke 
of  the  pen  was  made  by  this  young  man  not  eighteen  months  in 

the  practice  of  the  law In  eight  years  from  that  time  he 

was  a  partner  with  David  Dudley  Field,  with  one-third  interest  in 
the  immense  business  of  that  firm. 


li 


I 


hi' 


t 


82  The  Principles  of  Natural  Taxation 


Of  Mr.  Field  it  has  been  said : 

He  was  a  giant,  physically  and  intellectually.  He  never  knew 
fear.  He  was  not  small  in  any  respect.  He  resorted  to  no  legal 
tricks  for  his  success.  The  success  of  the  firm  of  Field  &  Shear- 
man was  due  as  much  to  their  correct  knowledge  of  the  code 
of  procedure  as  to  intimate  or  deep  knowledge  of  the  principles  of 
the  law  itself.  No  firm  in  the  city  of  New  York  was  ever  abused 
by  bar  or  press  as  much  as  that  of  Field  &  Shearman.  Most 
of  the  points,  however,  on  which  Mr.  Field  was  at  times  severely 
criticized  by  his  brother  lawyers  were,  to  the  great  credit  of  Mr. 
Field  and  Field  &  Shearman,  subsequently  sustained  by  the  highest 
court  in  the  state. 


An  eminent  contemporary  once  wrote  of  Mr.  Shearman : 

I  have  always  thought  that  he  had  the  greatest  intellect  of 
any  man  of  his  generation  at  the  bar,  but  it  was  Mr.  Field  who 
gave  Mr.  Shearman  the  opportunity  to  bring  out  all  that  was 
within  him,  and  without  such  opportunity,  which  was  exceptional, 
Mr.  Shearman  would  never  have  been  known  except  as  an  author. 
That,  after  all,  gives  more  fame  than  any  honor  won  at  the  bar, 
for  books  live  after  men  die ;  and  the  reason  why  Mr.  Field  will 
be  known  when  all  the  lawvers  of  his  own  and  preceding  genera- 
tions in  the  United  States 'are  forgotten  is  because  of  the  inno- 
vation he  brought  about  by  the  introduction  of  his  Codes,  the 
object  of  forty  years  of  diligent  pursuit.    In  that  respect  he  was 

like  Justinian.  ,      u 

It  speaks  for  itself  that  Mr.  Shearman  at  thirty-five  should 
have  commended  himself  to  intimate  relations  with  a  man  who 
was  the  father  of  a  world-wide  reformed  "  common  law  proce- 
dure," who  with  one  brother,  Cyrus  W.,  father  of  the  Atlantic 
cable,  and  another,  Stephen  J.,  thirty-four  years  Chief  Justice 
of  the  United  States,  formed  the  celebrated  Field  triad.  His 
firm  being  at  that  time  (1869)  the  attorneys  for  the  Erie  Rail- 
road, its  officers  bargained  with  them  to  have  Mr.  Shearnian 
come  and  sit  in  an  anteroom  of  their  office  simply  for  consulta- 
tion, at  $25,000  for  his  year's  salary.  Succeeding  the  Black  Fri- 
day, September  24  of  the  same  year,  various  suits  had  been 
brought  in  the  courts,  involving  more  than  $50,000,000.     Shear- 


Thomas  G.  Shearman,  1834-1900 


83 


man  &  Sterling,^  who  had  succeeded  to  Field  &  Shearman, 
were  retained  to  defend  them,  and  the  law  and  facts  were  decided 
as  Mr.  Shearman  contended  that  they  should  be.  ...  .  Before 
he  had  been  four  years  at  the  bar,  in  connection  with  Mr.  TiUing- 
hast,  Mr.  Shearman  had  printed  and  published  a  treatise  on 
pleadings  and  practice  in  the  state  of  New  York,  which  was  a 
work  in  two  volumes,  aggregating  more  than  one  thousand  pages, 
and  the  second  volume  was  entirely  his  own  work.  In  connec- 
tion with  Mr.  Redfield,  a  few  years  later  he  published  an  ele- 
mentary treatise  on  the  Law  of  Negligence,  which  has  run  through 
more  editions,  as  we  understand,  than  any  other  elementary  work 

published  in  this  country  in  this  generation Mr.  Shearman 

would  draw  and  execute  contracts  involving  the  largest  amounts 
of  property  and  money  of  any  man  that  has  stood  at  the  Amer- 
ican bar  in  this  generation,  and  then  come  home  to  Brooklyn  to 
this  *' prayer-meeting "  and  speak  words  of  consolation  to  those 
who  were  afflicted  and  suffering ;  to  take  his  place  in  the  Sunday 
school  and  Sunday  school  teachers'  meeting,  to  give  kindly  cheer 
to  those  with  whom  he  came  in  contact. 

Dr.  Lyman  Abbott,  Beecher's  successor  in  the  Plymouth 
pulpit,  said  of  Mr.  Shearman: 

He  was  by  profession  a  lawyer ;  by  temperament  and  nature 

he  was  a  reformer He  watched  the  welfare  of  the  poor 

and  suffering,  the  outcast  and  the  unfortunate,  and  he  studied 
how  to  relieve  them.  This  it  was  that  made  him  interested  in 
labor  organizations,  that  made  him  a  single-tax  man,  and  a  civic 
and  municipal  reformer.  He  gave  a  large  measure  of  his  Hfe 
and  brought  all  his  energy  to  problems  that  touched  the  Hves  of 
others,  and  did  not  touch  his  own. 

Edward  M.  Shepard  said:  "I  declare  of  Thomas  G. 
Shearman  that  few  men  of  our  land,  or  of  our  time,  have 
nearly  approached  him  in  zeal  for  the  rights  of  the  plain  people, 
as  against  the  craft  and  strength  of  the  more  powerful." 

iThe  Shearman  &  Sterling  of  today  at  55  Wall  Street,  New  York 
City. 


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84  The  Principles  of  Natural  Taxation 

Something  of  general  interest  to  all  real  students,  but 
especially  to  those  of  the  law,  is  found  in  the  critical  analysis 
of  a  fellow-craftsman,  a  partner  for  some  years  previous  to 
his  connection  with  David  Dudley  Field,  Mr.  Amasa  J.  Red- 
field,  who  wrote  of  Mr.  Shearman : 

His  mind  was  pervaded  by  "an  original,  intrinsic  equity." 
....  If  a  particular  judgment  had  wrought  an  injustice,  he 
instinctively  questioned  or  peremptorily  denied  its  authority  to 
control  in  any  other  cases,  however  eminent  the  court  which 
pronounced  it.  As  he  conceived  it,  the  aim  of  law  is  to  accom- 
plish the  ends  of  justice,  or,  as  put  by  Burke,  *' there  are  two, 
and  only  two,  foundations  of  law  —  equity  and  utiHty."  .... 
He  was  never  dismayed  by  a  multitude  of  cases  bearing  upon 
a  given  point  of  law,  however  various  their  particular  facts,  or 
apparently  irreconcilable  their  several  judgments  with  each  other; 
he  seemed  to  have  an  intuitive  perception  of  the  real  principle 
at  the  bottom  of  the  whole  mass  of  adjudications,  and  brought  it 
forth  to  the  light,  in  a  single  comprehensive  statement,  marvel- 
ously  brief  and  clear.  At  the  same  time,  as  I  have  had  many 
opportunities  of  observing,  his  precise  and  logical  habit  of  mind 
tended  always  to  moderation  of  statement  and  the  avoidance  of 

excessive  generalization He  had  a   faculty  of   instantly 

catching  sight  of  an  important  point  of  any  narrative  or  argu- 
ment—  or  the  absence  of  any  —  on  each  page  of  a  book  as  he 
rapidly  turned  leaf  after  leaf.  He  seems  to  have  had  Macaulay's 
knack  of  never  reading  the  lines  of  a  printed  page,  but  took  in 
the  whole  of  it  at  one  sweep  of  the  eye,  from  top  to  bottom, 
discovering  at  once  whether  it  was  worth  a  more  careful  perusal. 
....  In  him  the  man  was  greater  than  the  lawyer.  His  profes- 
sional obligations  were  many  and  insistent,  but  such  were  the 
sincerity  of  his  sympathy  and  his  large  view  of  things,  that  he 
never  lacked  the  time  nor  the  grace  to  step  aside  to  help  a  friend,^ 

*  In  view  of  the  foregoing  tributes,  the  writer  trusts  that  he  does  not 
violate  the  proprieties  when  he  betrays  an  ambition  to  couple  his  name  in 
ever  so  humble  a  way  with  that  of  a  man  whose  life  was  so  full  of  laudable 
accomplishments,  by  inserting  here  a  quotation  from  the  private  cor- 
respondence of  Mr.  Shearman  who  had  been  speaker  of  the  evening  at 
four  of  the  series  of  banquets  then  being  given  by  the  Massachusetts  Single 
Tax  League.    On  his  last  vacation  he  wrote  from  Geneva  to  a  favorite 


Thomas  G.  Shearman,  1834-1900 


85 


nor  the  will  to  devote  his  powers,  without  a  suggestion  of  per- 
sonal advantage,  to  the  promotion  of  every  civic  and  civilizing 
endeavor. 

Mr.  Shearman  left  an  estate  not  far  exceeding  three  hun- 
dred thousand  dollars.  It  would  have  been  much  larger  had 
it  not  been  for  the  charity  he  was  constantly  dispensing. 
Although  his  business  was  domiciled  in  Wall  Street,  he  was  not 
a  speculator.  The  size  of  his  estate  was  not  the  result  of  real 
estate  transactions  but  of  his  savings  from  income.  It  was 
not  due  to  especially  large  fees.  Those  that  he  received  were 
moderate.  He  did  a  great  deal  of  professional  work  without 
any  charge  whatever,  from  sentiment  for  the  unfortunate  or 
as  a  charity.  He  had  an  exceedingly  keen  mind,  and  an  ex- 
ceptionally retentive  memory,  and  to  these  two  distinguishing 
qualities  he  was,  to  a  most  extraordinary  degree,  indebted  for 
his  success.. 

The  foregoing  will  give  the  reader  an  outline  picture  of  the 
type  and  caliber  of  a  man  who  gave  his  best  years  and  best 
efforts  to  present  the  principles  and  possible  practice  of  the 
single  tax,  cleared  of  all  economic  entanglements,  in  such  plain 
form  that  they  can  be  intelligently  studied  by  taxing  authori- 
ties, economists,  and  all  others  who  are  interested.  It  is  be- 
lieved to  be  of  educational  value  to  present  here  his  own 
delineation  of  taxation  as  a  science,  together  with  his  predic- 

Sunday-school  pupil,  now  Mrs.  C.  J.  Northrop:  "In  all  times  it  has  been 
the  misfortune  of  reforms  that  some  of  their  advocates  have  made  it 
impossible  for  others  to  do  any  effective  work  for  them  for  considerable 
periods. 

"...  At  this  time  the  professed  friends  of  every  reform  in  which  I  am 
much  interested  insist  upon  mixing  it  with  retrograde  movements  or  have 
adopted  a  policy  of  bitterness  and  vituperation  or  have  thrown  it  entirely 
overboard.  There  is  no  one  left,  except  Mr.  Fillebrown,  with  whom  I  can 
co-operate.  I  have  told  him  that  I  will  do  anything  for  and  with  him  that 
a  New  Yorker  can  do  for  a  Bostonian.** 


■.!, 


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The  Principles  of  Natural  Taxation 


tion  of  what  betterments  it  may  be  expected  to  work  in  the 
line  of  social  welfare. 

THE  NATURAL  TAX ' 

1.  Automatic  taxation.  —  Having  seen  that  every  form  of 
indirect  taxation  is  unjust  to  the  poor,  and  that  every  form 
of  so-called  direct  taxation  thus  far  examined  is  unjust  to  the 
honest,  we  cannot  be  surprised  at  the  unanimity  with  which  it 
has  hitherto  been  declared  that  there  is  no  scientific  or  natural 
method  of  taxation. 

Nevertheless,  if  we  can  find  in  actual  operation,  in  every 
civilized  country,  a  species  of  taxation  which  automatically  col- 
lects from  every  citizen  an  amount  almost  exactly  proportioned 
to  the  fair  and  full  market  value  of  the  benefits  which  he  derives 
from  the  government  under  which  he  lives  and  the  society  which 
surrounds  him,  may  we  not  safely  infer  that  this  is  natural  taxa- 
tion? And  is  not  such  taxation  capable  of  being  reduced  to  a 
science  ? 

Such  an  automatic,  irresistible,  and  universal  system  does 
exist.  All  over  the  world  men  pay  to  a  superior  authority  a 
tribute,  proportioned  with  wonderful  exactness  to  these  social 
advantages.  Each  man  is  compelled  to  do  this,  by  the  fact  that 
other  men  surround  him,  eager  to  pay  tribute  in  his  place  if  he 
will  not.  The  just  amount  of  this  tribute  is  determined  by  the 
competition  of  all  his  neighbors,  who  calculate  to  a  dollar  just 
how  much  the  privilege  is  worth  to  them,  and  who  will  gladly  take 
his  place  and  pay  in  his  stead.  Every  man  must,  therefore,  pay 
as  much  as  some  other  man  will  give  for  his  place ;  and  no  man 
can  be  made  to  pay  any  more. 

2.  Ground  rent.  —  This  tribute  is  sometimes  paid  to  the 
state,  when  it  is  called  a  tax;  but  it  is  far  more  often  paid  to 
private  individuals,  when  it  is  called  ground  rent. 

Where  there  is  no  government  there  is  no  ground  rent.  As 
government  grows  more  complex  and  does  more  for  society, 
ground  rents  increase.  Any  advantage  possessed  by  one  piece  of 
land  over  another  will,  it  is  true,  give  rise  to  rent ;  but  that  rent 
cannot  be  collected  without  the  aid  of  government ;  and  no  advan- 
tage in  fertility  is  ever  equal  in  value  to  the  advantage  of  society 
and  government.  An  acre  of  sand  on  the  coast  of  New  Jersey, 
at  Atlantic  City,  Cape  May,  or  Long  Branch,  is  worth  more  rent 

1  Natural  Taxation,  Chap.  ix. 


Thomas  G.  Shearman,  1834-1900 


87 


than  a  million  acres  of  fertile  land  five  hundred  miles  distant 
from  all  human  society.  The  sixteenth  of  an  acre  of  bare  rock 
in  New  York  City  is  worth  more  than  a  thousand  acres  of  the 
best  farming  land  in  Manitoba. 

Ground  rent,  therefore,  is  the  tribute  which  natural  laws  levy 
upon  every  occupant  of  land,  as  the  market  price  of  all  the  social 
as  well  as  natural  advantages  appertaining  to  that  land,  including, 
necessarily,  his  just  share  of  the  cost  of  government.^ 

*  The  definition  of  rent  here  given  is  not  inconsistent  with  the  principles 
of  Ricardo ;  although  it  is  not  expressed  in  his  words.  As  Senior  and  other 
friends  of  Ricardo  have  remarked,  he  never  took  pains  to  express  himself 
accurately;  and  he  constantly  assumed  that  his  readers  would  remember 
every  limitation  which  he  had  once  laid  down  and  would  comprehend  all 
that  was  implied  in  his  mind.  His  definition  of  the  law  of  Rent  is  a 
remarkable  illustration  of  his  peculiar  methods. 

No  man  could  have  been  more  fully  aware  than  was  Ricardo,  of  the 
enormous  amount  of  rent  which  was  collected  in  his  own  time  from  land 
which  had  no  fertility  and  no  productive  power.  Most  of  his  life  was 
spent  upon  just  such  land  in  London;  and  for  the  use  of  such  land  he  paid 
and  received  great  rents.  Yet  his  famous  definition  assumes  that  rent  is 
never  paid  for  anything  except  "the  use  of  the  original  and  indestructible 
powers  of  the  soil."  And  his  exposition  of  the  operation  of  this  law  is 
confined  so  strictly  to  the  growth  of  "corn"  (that  is,  wheat),  that  some 
of  his  disciples  and  many  of  his  critics  seriously  assume  that  Ricardo  did 
not  suspect  the  existence  of  any  law  of  rent,  which  was  not  governed  en- 
tirely by  the  growth  of  "corn." 

But  Ricardo's  methods,  in  this  and  in  other  instances,  recall  the  style 
of  the  Ten  Commandments.  Taken  literally,  those  commandments  are  as 
defective  a  code  of  morals  as  can  be  found  in  almost  any  ethical  system. 
They  do  not  in  terms  forbid  the  most  brutal  violence  or  recklessness,  if 
death  does  not  result,  nor  any  form  of  fraud  or  swindling  not  amounting 
to  literal  theft.  They  do  not  forbid  any  form  of  outrage  upon  unmarried 
women.  They  do  not  forbid  lying,  except  in  judicial  proceedings.  They 
have  not  a  word  about  malice,  envy,  hatred,  bribery,  betrayal  of  trust,  or 
even  treason.  And  yet  both  the  Hebrew  nation  and  the  Christian  church 
have  always  seen  these  prohibitions  implied  in  the  curt  words  vvhich  de- 
nounce merely  a  few  of  the  worst  and  most  striking  forms  of  crime. 

So  it  is  with  Ricardo.  He  took  the  most  striking  and  easily  understood 
illustration  of  a  principle  as  his  method  of  stating  the  principle  itself.  His 
writings  always  bear  the  marks  of  a  genius,  which  was  driven  by  its  own 
internal  energy  to  find  relief  in  utterance,  but  which  cared  very  little 
whether  its  utterances  were  understood  or  not.  In  this  particular  instance, 
he  suggested  a  principle  by  a  single  illustration  of  the  most  familiar  char- 
acter. But  the  principle  is  not  limited  by  the  illustration.  Any  advantage 
which  one  piece  of  land  has  over  another,  for  the  use  of  man,  was  in- 
cluded, in  Ricardo's  mind,  among  the  "original  and  indestructible  powers 
of  the  soil."  And  foremost  among  these  advantages  stands  that  of  afford- 
ing standing  ground,  in  the  midst  of  a  highly  civilized  society,  under  the 
protection  of  a  highly  organized  and  faithful  government. 


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The  Principles  of  Natural  Taxatio  i 


3.  The  justice  of  ground  rent.  —  Now  observe  how  per- 
fectly this  natural  tribute  meets  all  the  requirements  of  abstract 
justice,  with  which  our  professor  friends  have  so  long  wrestled 
in  vain.  Here  is  the  exact  quid  pro  quo.  No  sane  man,  in  any 
ordinary  society,  pays  too  much  rent.  For  he  pays  no  more  than 
some  other  man  is  willing  to  pay  for  the  same  privileges.  He 
therefore  pays  no  more  than  the  market  value  of  the  advantage 
which  he  gains  over  other  men  by  occupying  that  precise  position 
on  the  earth.  He  gains  a  certain  profit  out  of  that  position  which 
he  could  not  gain  elsewhere.  That  fact  is  conclusive  proof  that 
this  profit  is  not  the  fruit  of  his  labor,  but  comes  out  of  some 
superior  fertility  in  the  soil,  some  superior  opportunity  for  selling 
the  fruits  of  his  labor,  some  superior  protection  from  government 
in  the  enjoyment  of  those  fruits,  or  some  other  advantage  of 
mere  position.  Thus  he  receives  full  value  in  exchange  for  his 
payment.  He  receives  it,  not  merely  society  in  general.  He 
receives  the  wlwle  of  it ;  he  is  not  compelled  to  divide  a  dollar's 
worth  of  this  benefit  with  his  neighbors.  But,  on  the  other  hand, 
he  pays  the  full  value  of  what  he  thus  receives,  and  he  owes 
nothing  more  to  anybody.  The  transaction  is  closed  upon  fair 
and  equal  terms. 

Here,  then,  is  a  tax,  just,  equal,  full,  fair,  paid  for  full  value 
received,  returning  full  value  for  the  payment,  meeting  all  the 
requirements  of  that  ideal  tax  which  professors  and  practical 
men  alike  have  declared  to  be  an  impossibility.  It  is  not  merely 
a  tax  which  justice  allows — it  is  one  which  justice  demands. 
It  is  not  merely  one  which  ought  to  be  collected  —  it  is  one  which 
infallibly  will  be  and  is  collected.  It  is  not  merely  one  which 
the  State  ought  to  see  collected  —  it  is  one  which,  in  the  long  run, 
the  State  cannot  prevent  from  being  collected.  The  State  can 
change  the  particular  landlord  —  it  cannot  abolish  rent. 

4.  Landlords  natural  tax-gatherers.  —  It  is  quite  true  that 
some  men  do  not  pay  ground  rent  to  anyone  else.  But  these  are 
landlords  of  the  mostly  highly  developed  type.  A  few  of  these 
men  seem,  at  first  glance,  neither  to  pay  nor  receive  ground  rent. 
But  this  is  an  illusion.  They  do  receive  such  rent,  in  the  value 
which  remains  in  their  possession  in  excess  of  what  they  would 
hold  if  they  paid  rent  like  other  people.  Moreover,  such  men 
almost  invariably  have  either  paid  a  price  for  the  land  on  which 
they  live  (which  is  capitalized  rent  paid  by  them),  or  they  hold 
land  which  cost  them  less  than  they  could  sell  it  for  (which 


Thomas  G.  Shearman,  1834-1900 


89 


is  capitalized  rent  gained  by  them),  or  they  have  done  both. 
Those  who  actually  receive  ground  rent,  or  who  could  receive 
it  if  they  would,  form  the  class  which  we  call  "landlords."  They 
are  the  tax-gatherers  appointed  by  Nature.  Year  by  year  they 
assess  the  value  of  the  privilege  of  occupying  their  land.  They 
can  do  this,  with  an  accuracy  to  which  no  government  assessor 
can  ever  attain,  because  they  receive,  at  least  once  a  year,  the 
best  possible  information  as  to  this  value,  in  the  form  of  bids 
from  tenants.  They  have  only  to  announce  their  willingness  to 
receive  bids,  and  the  bids  come  in.  Nobody  runs  after  the  asses- 
sor to  tell  him  what  property  is  worth.  Everybody  runs  after  the 
landlord  to  tell  him  what  his  land  is  worth.  Not  that  everybody 
tells  him  the  truth ;  but  he  soon  finds  out  what  is  the  truth,  by 
comparing  conflicting  statements.  The  landlord,  we  repeat,  is  Na- 
ture's elected  tax-gatherer.  But  Nature  does  not  compel  him,  any 
more  than  any  other  collector  of  taxes,  to  pay  over  to  the  State 
what  he  collects.    This  must  be  done  by  the  State  itself. 

5.  Taxation  of  ground  rents.  —  Nature,  having  thus  pro- 
vided a  method  by  which  all  men  pay,  of  necessity,  a  tribute 
sufficient  to  defray  all  expenses  of  government,  clearly  points 
to  the  collection  of  such  expenses  from  this  tribute.  We  have 
already  seen  that  Nature  and  Science  condemn  every  other  method 
of  raising  public  revenue,  by  making  equality  and  justice  impos- 
sible under  any  such  method.  Do  they  not,  with  equal  clearness 
and  precision,  point  to  the  taxation  of  ground  rents,  as  not 
merely  a  just  method  of  raising  revenue,  but  also  as  the  only 
just  one?  Scientifically  speaking,  a  tax  upon  ground  rents  is 
not  a  tax  at  all :  it  is  merely  the  collection  by  the  State  of  a  tax 
already  levied  by  an  automatic  process.  If  we  call  it  a  tax,  it  is 
a  tax  upon  the  proceeds  of  taxation,  and  nothing  else.  Until 
this  source  of  revenue  is  exhausted,  every  other  tax  is  double 
taxation.  So  long  as  this  fund  remains,  every  other  tax  is,  of 
necessity,  unjust,  as  truly  as  it  would  be  unjust  to  squander  the 
proceeds  of  any  tax  among  a  few  favored  officials  and  then  levy 
the  whole  of  the  same  tax  over  again  upon  the  people.  Seldom 
has  there  been  a  more  beautiful  illustration  of  the  wise  yet  relent- 
less working  of  natural  law  than  in  the  proved  impossibility  of 
justly  collecting  any  tax  other  than  upon  ground  rent.  It  shows 
that  Nature  makes  it  impossible  to  execute  justly  a  statute  which 
is  in  its  nature  unjust.  The  propriety  of  an  exclusive  tax  upon 
ground  rents  is  established,  not  merely  by  affirmative  proof  of  its 


^. 


P<  :. 


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90  The  Principles  of  Natural  Taxation 

justice,  but  by  the  demonstration  of  universal  experience  that  no 
other  form  of  taxation  can  be  made  effective,  adequate,  just,  and 

equal. 

6.  No  objectionable  methods  of  collection.  —  The  absolute 
soundness  of  the  theory  upon  which  the  tax  on  ground  rents  is 
based  is  further  established  by  the  fact  that  its  efficient  collection 
requires  no  objectionable  methods.  Such  a  tax  already  exists 
in  the  United  States,  although  it  is  covered  up  by  a  multitude  of 
other  taxes.  We  all  know,  by  experience,  that  such  a  tax  is 
entirely  free  from  the  oppressive  and  corrupting  incidents  of 
other  taxes.  It  calls  for  no  personal  returns,  no  taxpayers'  oaths, 
no  exposure  of  private  affairs.  The  collector  of  such  a  tax  would 
not  have  the  slightest  excuse  for  inquisitorial  proceedings,  for 
the  examination  of  private  books,  for  entry  into  houses,  for  per- 
sonal searches,  or  for  asking  a  single  question  of  the  taxpayer. 
In  fact,  he  would  not  pay  the  smallest  attention  to  any  statement 
which  a  taxpayer  might  make.  Women  and  children  would  be 
taxed  no  more  heavily  than  men.  Trust  estates  would  pay  no 
more  than  others.  There  would  be  no  exemptions,  no  favoritism, 
and  no  preference  given,  either  to  the  rich  or  to  the  poor.  Mis- 
takes, of  course,  would  occur,  and  the  bribery  of  assessors  would 
be  possible.  But  those  are  an  extremely  small  part  of  the  evils 
of  all  existing  methods  of  taxation ;  and  some  of  the  most  mon- 
strous inequalities  are  found  where  the  assessors  are  absolutely 
incorruptible  and  thoroughly  competent.     All  of  these   would 

disappear. 

7.  Assessment  of  ground  rent  practicable.— -It  is  asserted 
by  a  few  persons,  who  have  given  no  careful  consideration  to  the 
subject,  that  it  is  as  difficult  to  assess  accurately  the  value  of  the 
bare  land  as  it  is  to  assess  any  other  property.  This  objection 
will  not  bear  the  least  examination. 

Of  course,  absolute  accuracy  is  not  to  be  expected  in  anything. 
It  has  not  pleased  God  to  make  this  world  literally  perfect,  in  any 
respect ;  and  man  cannot  hope  to  be  wiser  than  his  Maker.  But 
a  close  approach  to  accuracy  is  possible  in  taxing  ground  rents, 
and  it  is  not  possible  in  any  other  tax. 

Where  land  is  rented  separately  from  its  improvements,  the 
tax  can  be  collected  with  almost  ideal  accuracy.  The  tenant  can 
be  required  to  pay  it,  being  allowed  to  deduct  it  from  his  rent. 
He  will  have  no  motive  for  understating  the  rent,  and  if  he  over- 
states it  the  loss  will  be  his  own.     Nothing  but  positive  fraud 


Thomas  G.  Shearman,  1834-1900 


91 


on  the  part  of  the  official  assessor  can  produce  inequality  in  this 
tax,  and  such  fraud  would  be  too  dangerous  to  be  common. 

Where  land  and  improvements  are  rented  together,  the  value 
of  the  land  alone  is  always  approximately  ascertainable.  Real 
estate  dealers  in  the  district  would  have  little  difficulty  in  esti- 
mating the  price  at  which  any  tract  of  land  could  readily  be  sold, 
and  this  would  be  the  proper  basis  for  assessment. 

Where  land  is  owned  by  the  actual  occupier,  dealers  can  still 
easily  estimate  its  market  value.  Titles  to  town  lots  are  con- 
tinually changing,  thus  fixing  a  standard  of  prices ;  while  in  rural 
districts  there  is  much  less  variation  in  prices,  and  all  the  neigh- 
bors know  the  relative  value  of  each  farm.  Whatever  inequali- 
ties might  remain,  it  is  certain  that  they  would  be  vastly  less  than 
those  which  are  now  common. 

8.  Assessment  of  farm  land,  —  It  has  been  asked:  How 
can  the  unimproved  value  of  farm  lands  be  ascertained  after  they 
have  been  cleared,  plowed,  drained,  and  fertiHzed  for  many 
years?  The  answer  is  simple.  The  whole  of  a  farm  is  to  be 
assessed  at  the  same  value  per  acre  which  attaches  to  the  un- 
improved land  remaining  on  the  farm  and  having  substantially 
the  same  natural  advantages  or  disadvantages.  It  is  next  asked : 
How  shall  such  an  estimate  be  made  if  the  whole  farm  has  been 
fully  cultivated  ?  There  is  no  such  farm,  except  a  few  very  small 
ones,  selected  from  larger  farms;  and  in  those  cases  the  valua- 
tion can  be  made  upon  the  basis  of  unimproved  land  on  adjoining 
farms.  It  has  been  pretended  that  there  are  cases  in  which  there 
is  no  unimproved  land  near  by.  But  this  is  almost  absurd.  Yet 
if  such  a  marvelous  farm  could  be  found,  it  is  certain  to  be  close 
to  a  highway.  The  price  which  could  be  obtained  for  the  land 
covered  by  the  highway,  if  closed  and  sold,  would  afford  a  perfect 
test  of  the  value  of  all  adjoining  land. 

But  the  best  reply  to  all  such  objections  is  to  be  found  in 
the  practical  experience  of  California,  where  this  very  method 
of  assessment  is  carried  out  in  agricultural  districts,  without 
difficulty,  having  been  required  by  law  ever  since  1879,  ^^^  by 
the  experience  of  Massachusetts,  where  the  value  of  farm  lands 
has  been  ascertained  by  the  decennial  census,  for  many  years, 
carefully  separating  the  value  of  improved  lands  from  unimproved 
and  unimprovable  lands. 

9.  Judicial  correction  of  assessments, — Under  the  present 
systems  of  taxation  it  has  been  found  necessary  to  allow  appeals 


■  o 
1 1 


I 


if 


92  The  Principles  of  Natural  Taxation 

to  the  courts  from  some  unjust  assessments ;  while  state  boards 
of  equalization  in  New  York,  Illinois,  California,  and  other  states 
put  county  valuations  up  or  down,  in  order  to  remedy  the  evils 
caused  by  local  carelessness  or  evasion.  These  remedies  should 
be  extended  and  placed  upon  a  foundation  of  complete  justice. 
The  courts  should  be  given  full  power  to  make  local  assessments 
uniform,  reducing  every  assessment  to  the  basis  of  the  lowest  in 
the  county.  The  county  would  lose  no  revenue,  for  the  tax  rate 
would  be  increased  to  correspond  with  the  general  reduction.  But 
citizens  would  be  relieved  from  the  gross  injustice  which  many 
now  suffer.  At  present,  in  New  York,  if  not  everywhere,  a  tax- 
payer can  obtain  no  relief  unless  his  own  property  is  overvalued. 
But  an  undervaluation  of  his  neighbor's  is  just  as  effectual  an 
increase  of  his  share  of  the  general  burden  as  would  be  an  over- 
valuation  of  his  own  property.  It  would  cast  an  offensive  respon- 
sibility upon  him,  to  give  him  relief  only  through  a  judgment 
increasing  his  neighbors'  assessments ;  and  such  a  course  would 
produce  no  better  result  for  the  county  than  would  a  general 
reduction  to  one  common  basis.  The  State  at  large  would  take 
care  of  its  interest  in  the  matter,  through  the  board  of  equalization. 

lO  Correction  by  sales, ^U  all  other  remedies  failed,  one 
would  remain,  which  is  far  too  dangerous  for  use  under  existing 
methods,  but  which  would  be  quite  safe  under  the  new  system. 
The  owner  of  any  real  estate  which  was  assessed  for  more  than 
the  real  value  of  the  bare  land,  could  refuse  to  pay  the  tax.  Then 
his  land  would  be  offered  for  sale  to  the  highest  bidder,  subject 
to  the  obligation  of  paying  to  the  owner  the  appraised  value  of 
all  improvements  thereon,  upon  the  principles  already  stated.  The 
value  could  never  be  more  than  the  cost  of  replacing  the  improve- 
ments, and  it  would  often  be  much  less,  because  costly  buildings 
are  frequently  erected  in  situations  where  they  are  or  become 
useless,  and  therefore  of  no  value.  To  the  full  extent  of  their 
actual  market  value,  however,  the  purchaser  at  a  tax  sale  would 
be  required  to  indemnify  the  owner.  Such  a  sale  would  deter- 
mine the  precise  value  of  the  land  for  the  purposes  of  taxation. 

Nor  would  such  sales,  however  frequent  they  might  be,  work 
any  hardship  to  the  landowner.  He  would  have  a  right  to  bid ; 
and  he  would  have  great  advantages  over  any  other  bidder.  AH 
the  money  paid  in  excess  of  the  tax  and  the  penalty  would  go 
directly  into  his  pocket;  and  therefore  he  would  be  the  only 
bidder  not  required  to  pay  more  than  that  sum.    If  the  tax  were 


Thomas  G.  Shearman,  1834-1900 


93 


really  excessive,  no  one  would  bid  up  to  it,  because  the  pur- 
chaser would  be  compelled  to  pay  annually  thereafter  as  large  a 
tax  as  he  was  willing  to  bid  at  the  sale.  The  tax  sale,  in  short, 
would  fix  the  valuation  upon  which  future  assessments  would 
be  made.  Thus  the  ground  rent  (which,  capitaHzed,  constitutes 
the  only  value  of  any  land)  would  be  fully  taxed ;  while  the  land- 
owner would  have  absolute  security  for  the  possession  of  the 
value  of  all  his  improvements,  free  of  tax.  But  no  such  experi- 
ment would  ever  become  really  necessary. 

11.  Taxation  of  franchises  and  monopolies.  —  It  has  been 
already  mentioned  that  the  professed  defenders  of  farmers  and 
other  owners  of  small  homesteads  oppose  the  concentration  of 
taxation  upon  ground  rents,  on  the  plea  that  this  would  exempt 
all  franchises  and  monopolies,  including  railways,  express  com- 
panies, telegraphs,  telephones,  gas  works,  electric  lighting  works, 
oil-pipe  lines,  and  the  like.  If  this  were  the  fact,  we  may  be 
sure  that  the  shrewd  managers  of  such  monopolies,  assisted  as 
they  are  by  the  most  sagacious  and  experienced  advisers  in  the 
country,  would  have  discovered  it  by  this  time.  We  may  also 
be  sure  that  the  legislatures  of  two-thirds  of  the  states,  owned 
as  they  are,  body  and  soul,  by  corporations  of  this  precise  class, 
would  hasten  to  avow  their  conversion  to  the  principle  of  taxing 
ground  rents  and  to  embody  it  in  their  statutes.  The  Senate  of 
the  United  States  would  before  now  have  passed  any  necessary 
amendment  to  the  Constitution,  by  a  two-thirds  vote. 

But  do  we  see  the  slightest  tendency  in  this  direction?  Is  the 
proposal  received  with  favor  by  the  managers  of  a  single  g^eat 
railway  or  telegraph  or  of  any  great  monopoly  ?  On  the  contrary, 
is  it  not  notorious  that  they  are  unanimously  and  bitterly  opposed 
to  it? 

These  gentlemen  are  not  deceived.  They  know  well  enough 
that  their  valuable  franchises  represent  exclusive  rights  to  the 
use  of  land,  and  that  they  neither  have  nor  can  have  any  exclu- 
sive rights  to  anything  else,  except  to  patent  rights,  which  are 
very  costly  and  which  last  only  for  a  few  years. 

12.  Railway  franchises.  —  Take  one  of  our  great  railway 
lines,  for  example.  Add  up  either  the  market  value  or  the  cost 
of  replacing  its  rails,  equipment,  building  improvements,  and 
chattels  of  every  kind,  whether  movable  or  immovable,  and  at 
a  most  liberal  valuation.  The  total  will  not  come  within  millions 
of  its  nominal  debt,  and  will  never  touch  its  capital  stock.    What 


94  The  Principles  of  Natural  Taxation 

* 

gives  value  to  the  enormous  amount  of  stock?  The  exclusive 
privilege  of  using  a  narrow  strip  of  barren  land,  five  hundred 
a  thousand,  or  two  thousand  miles  long,  ""broken  by  highways 
or  any  other  rights  over  land,  whether  public  or  private.  Under 
the  present  system  railway  managers  persuade  10^^!^^?^^^^^^^^:^^ 
that  this  land  should  be  valued  no  higher  than  equally  barren 
land  in  adjoining  farms,  and  the  farmers' especial  advocates  msist 
that  this  is  the  true  basis  of  valuation.    But  it  is  absurd. 

The  value  of  all  land  depends  upon  the  value  of  the  use  which 
can  be  made  of  it.  No  farmer  can  use  his  land  for  the  carriage 
of  goods  or  passengers  beyond  the  hmits  of  his  own  farm.  It 
all  the  farmers  between  New  York  and  San  Francisco  agreed  to 
build  a  railway,  without  forming  a  railway  corporation    they 

would  be  compelled  to  break  their  line  at  f^^.H^.^if  ^^Li^foie" 
mount  their  passengers  and  to  unload  their  freight  Therefore 
nobody  outside  of  a  railway  company  can  use  his  land  for  this 
most  valuable  purpose.  And  this  privilege  of  using  an  unbroken 
strip  of  land,  with  locomotives  runmng  forty  miles  an  hour  is 
all  which  gives  to  the  stock  of  any  American  railway  company 
its  market  value;  while  it  generally  covers  from  one-third  to  one- 
half  of  its  bonds,  in  addition. 

The  notion  that  such  privileges  on  land  are  to  be  appraised 
by  the  acre,  like  farm  lands,  can  be  readily  tested  by  applying 
the  same  principle  to  any  other  land.  In  great  cities  land  is  otten 
sold  at  a  price  estimated  by  the  square  foot.  Some  lots,  con- 
taining 2,000  square  feet,  are  salable  for  $200,000,  or  $100  per 
foot  But  if  a  single  foot  of  this  land  were  sold  by  itself,  with 
the  ioiowledge  that  no  more  could  be  had,  who  would  give  even 
one  dollar  for  it,  except  as  a  means  of  blackmailing  the  owner 
of  the  rest?  Just  so,  the  value  of  a  strip  of  land  unbroken  for 
a  thousand  miles,  for  use  as  a  railway,  is  something  immense ; 
while  the  same  land  cut  up  in  a  thousand  sections,  never  to  be 
united,  would  be  almost  valueless.  For  purposes  of  transporta- 
tion it  would  have  no  value  whatever.  ,  .         f  ^^ 

Again,  the  value  of  land  depends  upon  the  variety  of  uses  to 
which  it  may  lawfully  be  put.  Steam  railways,  although  very 
useful,  are  to  some  extent  a  nuisance.  The  government  cannot 
permit  them  to  be  operated  upon  every  tract  of  land,  ^-onse- 
quently,  land  owned  by  individuals  is  generally  restricted  to  other 
uses,  and  it  is  therefore  worth  less  than  land  owned  by  railway 
companies. 


Thomas  G.  Shearman,  1834-1900 


95 


13.  Other  franchises.  —  The  franchise  of  a  telegraph  com- 
pany is  of  the  same  nature.  It  is  absolutely  nothing  but  an  exclu- 
sive privilege  to  extend  its  wires  over  land.  But  this  is  a  privilege 
of  enormous  value.  The  founders  of  the  Western  Union  Tele- 
graph Company  have  managed  to  sell  this  privilege  to  investors 
in  its  stock,  for  at  least  $50,000,000. 

The  franchises  of  gas  companies,  electric  light  companies, 
steam  heating  companies,  water  works,  and  the  hke,  consist  so 
obviously  of  mere  privileges  to  use  unimproved  land  as  to  need 
no  explanation.  Street  railroads,  also,  so  palpably  own  no  privi- 
leges, other  than  the  mere  right  to  run  over  bare  land,  that  it 
seems  almost  an  insult  to  the  understanding  of  any  reader  to 
explain  the  case.  None  of  these  corporations  have  any  other 
franchises  than  these  rights  over  land.  For  these  franchises 
most  of  them  have  paid  enormous  bribes  to  legislators  and  alder- 
men. Upon  these  franchises  they  have  issued  vast  amounts  of 
stock  and  bonds.  One  such  corporation,  after  purchasing  all  the 
rails,  equipment,  and  other  productions  of  human  labor  connected 
with  the  road,  for  about  $200,000,  proceeded  to  issue  $8,000,000 
of  stocks  and  bonds  upon  its  land  privileges. 

It  will  be  said  that  there  are  general  railway  laws,  so  that 
anybody  can  construct  a  new  rival  line,  and  thus  destroy  the  land 
values  of  an  existing  line.  Whenever  that  can  really  be  done, 
the  truth  of  this  theory  is  promptly  proved,  by  the  destruction 
of  stock  values  in  both  corporations,  as  in  the  desperate  struggle 
between  the  New  York  Central  and  the  West  Shore  lines,  in  1884. 
But  this  is  only  partially  true.  A  rival  line  must  run  through 
towns  and  very  near  cities,  or  it  can  get  little  business.  The 
aldermen  of  every  city  must  be  bought  up ;  and  as  the  old  cor- 
poration will  pay  liberal  bribes  to  induce  the  aldermen  to^  do 
nothing,  the  new  one  must  bring  far  more  liberal  considerations 
to  bear  upon  our  patriotic  rulers.  Nor  is  it  merely  a  question 
of  money.  Bribery  must  be  conducted  decently  and  in  order. 
Public  sentiment  must  be  judiciously  worked  up  to  support  the 
scheme.  It  requires  an  immense  amount  of  ingenious  and  well- 
directed  effort  to  carry  any  such  project  into  effect. 

In  the  case  of  street  railroads,  telegraphic  subways,  gas  works, 
and  other  privileges  in  cities,  it  is  obvious  that  the  limit  is  soon 
reached,  and  even  the  liberality  of  a  legislature  or  a  board  of 
aldermen  cannot  make  room  for  many  rival  schemes  of  this  kind. 
The  streets  cannot  be  torn  up  forever,  although  in  New  York  and 


•■■/'"• 


96  The  Principles  of  Natural  Taxation 

Brooklyn  they  do  not  fall  much  short  of  this.  The  limits  imposed 
by  Nature  are  such  that  more  than  three- fourths  of  the  whole 
market  values  of  the  stock  and  bonds  of  corporations  having 
these  municipal  privileges  consist  of  pure  land  values. 

Under  the  present  system,  in  most  cases,  all  these  enormous 
values  go  untaxed.  The  law  of  New  York  distinctly  exempts 
franchises  from  taxation,  although  it  is  well  settled  that  they 
would  be  taxable  as  "land"  but  for  this  legislative  interference. 
Under  the  system  here  proposed  all  these  values  would  be  fairly 
taxed. 

14.  Can  the  rent  tax  be  shifted f—WhWt  the  Duke  of 
Argyll  and  all  his  landlord  allies  rend  the  air  with  their  denuncia- 
tions of  the  proposed  tax  on  rent,  as  confiscation  and  robbery, 
other  opponents  of  the  tax,  appreciating  the  fact  that  tenants 
far  outnumber  landlords  at  the  polls,  devote  their  energy  to 
proving  that  this  tax  would  all  be  shifted  upon  tenants,  by  an 
increase  of  rent,  so  that  landlords  would  finally  pay  none  of ^  it. 
If  this  were  true,  then  no  relief  from  the  unequal  distribution 
of  wealth  can  be  had,  for  all  direct  taxes  would  ultimately  fall 
upon  consumption,  just  as  surely  as  do  indirect  taxes.  In  short, 
no  tax  would  be  really  direct.  The  greatest  benefit  thus  far  held 
out,  as  the  result  of  adopting  an  exclusive  tax  upon  ground  rent, 
would  be  unattainable  under  that  or  any  other  system. 

On  the  other  hand,  if  this  doctrine  is  true,  the  indignation  of 
the  Duke  of  Argyll  and  all  the  great  landlords  of  Great  Britain 
and  Ireland  is  absurdly  misdirected.  If  they  can  recover  this 
tax  from  their  tenants,  precisely  as  the  importer  of  foreign  goods 
recovers  customs  taxes  from  the  purchasers  of  those  goods,  they 
will  lose  nothing  by  the  change,  and  may  even  profit  by  it.  It  is 
very  clear  that  the  landlords  do  not  believe  a  word  of  this  doc- 
trine of  shifting  taxation ;  for  if  they  did  they  would  look  with 
indifference,  if  not  with  positive  favor,  upon  the  taxation  of 
ground  rents.  So  far  from  doing  this,  dukes,  earls,  and  mar- 
quises are  eagerly  struggling  in  England  for  election  as  council- 
men  and  aldermen,  for  the  sole  purpose  of  preventing  the  taxation 
of  ground  rents. 

The  weight  of  authority  upon  such  a  question  is  worthy  of 
attention,  although  by  no  mean  decisive.  ^  Now,  while  a  few 
respectable  and  sincere  students  of  economic  science  hold  to  the 
doctrine  of  the  transferability  of  the  ground-rent  tax  to  the 
tenants,  no  one  will  dispute  that  an  overwhelming  weight  of 


Thomas  G.  Shearman,  1834-1900 


97 


authority,  both  in  numbers  and  in  reputation,  scout  that  doc- 
trine as  absurd.  Not  only  the  entire  school  of  Ricardo  and  Mill, 
but  also  nine-tenths  or  more  of  other  economic  writers,  make  it 
a  fundamental  doctrine  of  their  science  that  such  a  tax  never 
can  be  transferred  to  tenants. 

15.  The  question  illustrated.  — Let  us,  however,  consider 
the  question  for  ourselves,  as  if  it  were  entirely  new.  The  sim- 
plest way  of  testing  it  is  to  imagine  that  the  tax  was  made  heavy 
enough  to  absorb  the  whole  rent.  For,  although  this  is  impossible, 
it  really  makes  no  difference  whether  half  or  the  whole  of  rent 
is  taken  by  taxation,  so  long  as  the  State  is  determined  to  take 
some  fixed  proportion  of  rent.  Any  good  accountant  can  satisfy 
himself  that  the  result  would  be  the  same  under  either  plan.  But 
persons  unaccustomed  to  figures  could  not  follow  any  other 
calculation  so  easily  as  they  can  follow  one  based  upon  a  tax 
equal  to  the  whole  rent.  . 

Let  us  then  suppose  the  "single  tax  unlimited     to  be  in 
operation.     Let  us  suppose  the  total  ground  rent  of  the  United 
States  to  be  $1,000,000,000.    The  total  production  of  the  nation 
does   not   exceed    $13,000,000,000   per   annum.      Out    of    this, 
65,000,000  people  have  to  draw  their  living  expenses.    Even  if 
they  had  no  ground  rent  and  no  taxes  to  pay,  they  could  not 
possibly  save  $5,000,000,000  a  year.     But  suppose  they  could. 
The  landlords  collect  in  rent  $1,000,000,000.     The  government 
takes  the  whole  of  this  in  taxes.    The  landlords  then  shift  the 
tax  upon  the  tenants,  and  insist  upon  collecting  $2,000,000,000 
in  rent.    But  the  government  next  year  taxes  the  whole  of  this 
increased  sum  out  of  the  landlords.     The  landlords  then  raise 
their  rent  to  $3,000,000,000.     But  the  government  immediately 
takes  the  whole  of  that  in  taxes.    The  landlords  raise  their  rent 
to  $4,000,000,000.     The  government  again  takes  it  all.     They 
raise  rent  once  more  to  $5,000,000,000.    Again  it  is  all  swallowed 
up  in  taxes.    Will  the  landlords  raise  their  rent  again?     How 
can  they?     They  would  by  that  time  have  taken  every  dollar 
that  tenants  earned,  over  the  barest  living ;  and  if  they  attempted 
to  extort  another  dollar,  some  tenant  would  die  of  starvation; 
and  rents  would  fall,  from  lack  of  tenants.    And  as  the  govemr 
ment  would  have  extracted  the  whole  of  their  rent,  they  would 
have  gained  not  a  dollar  by  their  persistent  oppression  of  their 
tenants. 

i6.    Distinction  between  land  and  houses,  —  It  will  be  said 


98  The  Principles  of  Natural  Taxation 

that  nothing  of  this  kind  could  really  be  done  by  any  government. 
Quite  true ;  but  that  is  simply  because  nothing  of  the  kmd  could 
be  done  by  landlords.  Landlords  know,  to  their  cost,  that  it 
takes  three  or  four  years  to  enable  them  to  recover  from  tenants 
even  increased  taxation  upon  houses,  although  they  will  recover 
it  in  the  end.  But,  since  it  is  difficult  to  recover  a  tax  which 
tends  to  diminish  the  number  of  houses,  how  vastly  more  difficult 
must  it  be  to  recover  a  tax  upon  the  value  of  land,  which  has  no 
tendency  whatever  to  diminish  the  amount  of  available  land. 

And  here  the  reader  can  see  the  reason  for  the  distinction. 
If  owners  of  houses  cannot  recover  from  tenants  the  tax  upon 
houses,  nobody  will  build  any  more  houses  for  renting.  But  the 
owner  of  land  cannot  create  any  more  land,  no  matter  how  liber- 
ally he  may  be  paid  for  it ;  and  he  cannot  diminish  the  area  of 
land,  no  matter  how  little  he  may  receive  for  it.  Every  mcrease 
of  taxation  upon  ground  rents  makes  it  more  difficult  to  keep 
land  out  of  use,  and  therefore  it  increases  the  competition  between 
landlords  to  get  tenants.  Under  a  light  tax  upon  ground  rents, 
two  tenants  pursue  one  landlord.  But  under  a  heavy  tax,  two 
landlords  pursue  one  tenant.  If  ground  rents  should  be  taxed 
even  to  half  their  amount,  landlords  without  tenants  would  be 
compelled  to  sell  at  any  price  to  other  landlords  who  could  get 
tenants.  The  tendency  of  all  taxes  upon  ground  rents,  there- 
fore, is  to  reduce  rent,  rather  than  to  increase  it ;  and  this  makes 
the  very  idea  of  a  transfer  of  such  taxes  to  the  tenant  utterly 

absurd.  ,       ,      *i     j 

A  moment's  reflection  will  satisfy  everyone  that  landlords 
charge  just  as  much  for  their  land  as  they  can  possibly  get,  except 
in  special  cases  of  good  nature,  charity,  or  ignorance.^  In  all 
ordinary  cases  the  only  reason  why  they  do  not  charge  more  is 
that  they  cannot  find  anybody  able  and  willing  to  pay  more.  How 
can  this  condition  be  changed  by  taxes  upon  rent  ?  It  is  not  and 
it  cannot  be.  The  average  landlord  will  charge  the  highest  rent 
which  he  can  get,  tax  or  no  tax.    And,  as  no  man  will  ever  get 

*  This  IS  universally  true  in  the  United  States.  In  many  parts  of  Europe, 
especially  in  England,  agricultural  rents  are  limited  by  custom  and  pub  he 
opinion.  In  Ireland,  they  are  often  limited  by  law.  But  all  that  results 
from  such  restrictions  is  that  rent  is  divided  between  two  or  more  land- 
lords. The  mass  of  the  people,  who  are  the  real,  final  tenants,  gam  nothmg 
whatever.  The  farm-tenant  either  sublets  the  farm  at  a  higher  rent,  or 
he  makes  a  larger  profit  out  of  the  farm,  without  sellmg  his  produce  any 
cheaper  or  paying  a  penny  more  wages  to  his  laborers. 


Thomas  G.  Shearman,  1834-1900 


99 


more  than  he  can  get,  no  amount  of  tax  upon  ground  rents  will 
ever  be  shifted  over  to  tenants  by  an  increase  of  rents. 

17.  Amount  of  the  tax  on  rent.  —  It  does  not  follow  that 
the  State  should  compel  the  landlord  to  pay  over  all  that  he 
receives.  If  the  State  could  and  should  do  this,  the  landlord 
would  cease  to  do  his  work,  because  he  would  receive  no  com- 
pensation for  it.  Natural  laws  again  settle  this  question,  by 
making  such  exact  collection  impossible.  Not  all  the  power  of 
all  governments,  concentrated  upon  the  landlords  of  a  single 
town,  could  extract  from  them  precisely  100  per  cent  of  the  rent 
received  by  them. 

Nor  does  it  follow  that  even  90  per  cent  of  rent  ought  to  be 
taken.  Where  rents  are  large,  the  retention  of  10  or  even  5  per 
cent  might  be  sufficient  to  induce  landlords  to  follow  up  tenants 
and  extract  from  them  that  just  rent  which  everyone  ought  to 
pay.  Where  rents  are  small,  a  commission  of  10  or  even  15  per 
cent  may  be  insufficient  for  this  purpose.  An  iron  rule  is  not  a 
natural  rule ;  and  it  will  not  work  well. 

What  would  Nature  or  Science  dictate  upon  this  point?  Is 
it  not  that  the  State  should  collect  from  the  natural  tax  collectors 
whatever  amount  the  State  really  needs,  for  the  effective  but  eco- 
nomical administration  of  government?  Is  it  not  better,  in  case 
there  should  remain  any  considerable  excess  over  this,  that  it 
should  remain  in  private  hands,  rather  than  it  should  be  taken 
by  the  State,  before  the  State  officers  know  how  to  use  it  for  the 
real  benefit  of  the  people  at  large?  Grant,  if  you  please,  that 
there  would  be  such  surplus  of  rent  as  to  breed  wasteful  luxury 
among  landlords,  is  not  this  less  injurious  to  the  community  than 
wholesale  waste  and  embezzlement  of  public  funds?  Our  whole 
national  history  illustrates  the  truth  that  surplus  public  revenues 
first  corrupt  public  officers  and  then  debauch  the  nation  itself. 

But  in  fact,  in  the  long  run,  there  will  be  no  such  question 
to  decide.  The  honest  needs  of  public  government  grow  faster 
than  population  and  fully  as  fast  as  wealth  itself.  Local  taxation 
will  increase  rapidly ;  and  it  ought  to  do  so.  Such  taxation  in- 
creased in  Ohio,  for  example,  1,400  per  cent  in  forty  years,  be- 
tween 1846  and  1886;  while  population  increased  only  100  per 
cent,  and  wealth  1,000  per  cent.  It  is  more  likely  that  vigilance 
will  be  needed  to  prevent  the  taxation  of  rent  from  rising  too 
fast,  than  that  it  would  be  required  to  keep  landlords  from  re- 
taining too  much.    This  does  not  imply  that  ground  rent  will  not 


I 


Ri^; 


100         The  Principles  of  Natural  Taxation 

be  sufficient  to  supply  many,  possibly  all,  of  those  additions  to 
human  happiness  which  Henry  George  has  pictured  m  such  glow- 
ine  words  But  such  extensions  of  the  sphere  of  government 
must  take  place  gradually;  or  they  will  be  rumous  failures,  sim- 
ply  because  the  State  cannot  at  once  furnish  the  necessary  ma- 
chinery for  their  successful  operation.  ^  ,  ,  :.u 
This  natural  tax  might  be  adopted  in  one  day,  not  only  with- 
out  injury  to  the  nation,  but  with  positive  benefit  to  more  than 
nine-tenths  of  all  the  people.  But  this  would  be  strictly  upon 
condition  that  the  amount  collected  for  public  use  should  not  at 
first  exceed  that  which  was  previously  collected.  Indeed,  it  would 
be  essential  to  the  permanence  of  such  taxation  that  public  reve- 
nues  should  be  at  the  beginning  of  the  new  system  even  smaller 
than  they  were  immediately  before.  And  we  may  be  perfectly 
sure  that  they  would  be.    A  body  of  4,000,000  taxpayers  will 

^  \s^^^New  benefits  shared  with  landlords, —There  \s,  never- 
theless, a  certain  element  of  truth  underlying  the  idea  that  a  rent- 
tax  can  be  shifted.  While  it  is  not  true  that  one  dollar  of  the 
tax  can  be  transferred  to  the  tenant,  in  any  case  where  rent  is 
fixed  upon  strictly  business  principles,  it  is  true  that,  m  many 
places,  and  especially  in  rural  districts  of  England,  the  owners  of 
?ar^  lands  do  not  charge  the  full  market  value  of  the  land  to 
their  tenants.  Personal  considerations,  kindness  of  tf  hng»  c^^?" 
tom,  long-continued  relations  between  the  families  of  the  land- 
lord  and  the  tenant,  public  opinion,  tradition  the  desire  o  control 
votes,  and  many  similar  influences  keep  rents  below  their  market 
value  Under  a  system  of  taxation,  concentrated  upj)n  rents, 
these'influences  would  lose  much  of  their  power.  Under  a  tax, 
deliberately  raised  to  the  highest  practicable  point  these  influ- 
Sees  would  lose  all  of  their  power  Tenants  would  therefore 
find  their  rents  increased  to  the  full  value  of  the  land.  Here 
would  seem  to  be  a  real  shifting  of  the  tax. 

But  this  would  be  only  a  seeming,  not  a  reality.  Ihe  ten- 
ants who  now  receive  the  benefit  of  those  influences  are  in  real- 
fty  thimselves  landlords,  to  that  extent  They  divide  economic 
rent  with  their  landlords.  They  do  not  divide  the  rent  thus  left 
in  their  pockets,  with  the  community  at  large.  They  do  not  re- 
duce the  prices  of  their  products  or  charge  any  less  for  their 
services  Many  of  them  sublet  a  part  of  the  land  to  others,  to 
whom  they  charge  the  full  market  price.    The  community,  as  a 


Thomas  G.  Shearman,  1834-1900 


101 


whole,  pays  just  as  much  rent,  when  the  duke  allows  the  farmer 
to  occupy  land  at  20  per  cent  below  its  full  value,  as  it  does  when 
the  duke's  creditors  seize  his  land  and  make  the  farmer  pay  the 
last  penny  that  the  land  is  worth.  The  farmer  sells  wheat  at 
the  same  price  and  pays  to  his  laborers  the  same  wages,  in  either 
case.  But  there  is  a  good  deal  of  difference  in  the  style  of  his 
daughters'  dresses  and  the  length  of  his  annual  vacation. 

There  is  another  result  which  must  follow,  if  the  community 
gains  in  wealth  and  happiness,  through  this  change  in  methods  of 
taxation.  Every  advance  in  prosperity  —  every  widespread  in- 
crease in  wealth,  tends  to  increase  rent.  If  it  is  true,  as  will  be 
presently  maintained,  that  this  reform  in  taxation  will  stimulate 
production,  increase  wages,  promote  the  development  of  industry, 
add  to  the  profits  of  capital  and  reward  the  efforts  of  skill,  then 
there  will  be  a  greatly  increased  demand  for  the  locations  which 
offer  the  best  natural  opportunities  for  the  use  of  capital,  labor 
and  skill ;  and  ground  rents  will  rise.  But  this  is  not  the  shift- 
ing of  an  old  burden ;  it  is  the  sharing  of  a  new  benefit. 

SOCIAL  EFFECTS  OF  NATURAL  TAXATION  ^ 

1.  The  effect  in  general.  —  The  adoption  of  a  natural,  in- 
telligent, and  scientific  system  of  taxation  would  bring  about  a 
just  distribution  of  wealth,  would  give  a  perpetual  stimulus  to 
industry  and  production,  would  greatly  increase  wages,  would 
increase  the  profits  of  capital,  would  give  a  security  to  property 
now  unknown,  would  encourage  manufactures,  commerce,  and 
agriculture,  and  would  incidentally  solve  many  social  problems 
which  under  present  conditions  seem  almost  insoluble. 

It  is  hoped  that  as  each  branch  of  the  inquiry  has  been  dis- 
cussed, it  has  appeared  that  each  step  towards  this  great  but  sim- 
ple reform  has  been  attended  with  the  solution  of  some  difficult 
problem.     But  others  have  been  reserved  for  this  final  review. 

2.  Stimulus  to  production.  —  It  must  surely  be  evident, 
without  argument,  that  when  all  taxes  are  concentrated  upon 
ground  rents  alone,  and  when  every  piece  of  land  is  estimated 
for  assessment  at  the  amount  for  which  it  could  be  rented  for 
present  use,  the  tax  constantly  increasing,  in  exact  proportion  to 
any  increase  in  the  rental  value  of  the  land,  it  would  generally 
be  impossible  to  hold  any  land  out  of  use  for  the  purpose  of 

^Natural  Taxation,  Chap.  xiii. 


M 


102         The  Principles  of  Natural  Taxation 

sneculation  The  only  exception  would  be  cases  in  which  h  was 
srclearlv  desirable  that  the  land  should  be  preserved  for  future 
use  that  its  Assessor  could  better  afford  to  pay  the  tax  out  of 
WsdpUaf  tl^n  to  allow  the  land  to  be  put  to  any  Present  "^^ 
which  would  spoil  it  for  a  more  des.rab  e  future  use  The  pres 
sure  put  upon  the  landowner  to  make  '«pn'«4'^t^,/"'ii.°™ft' 
use  of  the  land  would,  in  most  cases,  be 'rr^'^tf  ^e  The  resuU, 
in  all  but  a  few  exceptional  cases,  would  be  t^^J/  ™|  J^^^^^ 
anyone  cared  to  claim  as  owner,  would  be  put  mto  immediate  use 
for  productive  purposes ;  while  a  vast  ^""ount  ,°f '^"^^.Jf ^^'^ 
now  held  for  pure  speculation,  would  be  abandoned  to  the  use 
nf  anvone  who  was  willing  to  pay  the  annual  tax. 

Under  Tuch  1  system  all  land  would  be  made  useful,  up  to 

Its  fun  caoS     The  possession  of  land  would  tiecess.tate  the 

onstltTp&ent  of^abor  in  its  use  and  fevelop-nt  ^^^^^^^^ 

all  who  were  unable  or  unwilling  to  use  land  to  the  best  aavan 

tage  of  the  community  would  abandon  it  to  those  who  were  both 

^'Vu"'tWs'?only  one  of  the  -ny.stimulants  to  produ^ion 
which  are  involved  in  reformed  taxation.  Think  of  the  many 
oS  encoSements  which  industry  would  receive  Money 
and  credit  frie  from  all  taxes,  would  crowd  mto  the  indus- 
trial  field      Factories,   mills,    furnaces,   foundries,   workshops 

tores  offices  machinery,  tools,  'f  rT"'%romTaxes  °  The 
every  conceivable  form,  would  all  ^e  ^ree  from  taxes.  1  he 
f,^Lr='  hams  croDS  plows,  tools  and  implements,  his  horses, 
SatTe  sheep  matTriais'^and  'products  of  eveiy  kind  would  be 
free  of  tax     His  land  could  be  drained,  stubbed,  subsoiled  and 

Srotrto  the  highest  point    without  adding  a  doHar  toj. 
♦,vpe      Commerce  would  be  free  as  air.      Ihe  larmer  wou m 
buv  in  theXapest  market,  and  sell  in  the  dearest     Monopoly 
could  no  longer^hinder  production^    The  only  hmit  of  produc- 

*^"°S.?;o:,':e4t^u"^  ten.  "wages"  as  including 
all  inJs%f  ^mpeiation  for%ersonal  'aborit  should  seem 
clear  that  the  great  increase  in  production  which  wou  d  thus  be 
hrn»Xt  about  must  greatly  increase  the  demand  for  labor,  and 
wS  thteforTprofuce  a  general  and  permanent  advance  m 

"^tinal  wages,  expressed  in  terms  of  money,  must  advance^ 
bccaus^lhere  wluld  be  an  anxious  demand  for  labor  on  the  part 


Thomas  G.  Shearman,  1834-1900 


103 


of  all  landowners.  For  without  a  constant  supply  of  efficient 
?abor  the  annual  tax  could  not  be  paid  -and  then  the  land  would 
fall  into  the  hands  of  those  who  would  extract  from  the  land 
ekher  by  their  own  labor  or  by  the  labor  of  others,  a  revenue 
sufficient  to  pay  the  tax,  with  a  profit.  The  increased  deniand 
for  labor  thus  arising  would,  in  any  country  large  enough  to 
make  a  rate  of  its  own,  largely  increase  the  genera  rate  of 
waees  That  this  is  the  invariable  result,  in  all  similar  cases, 
has  been  abundantly  proved  by  past  experience.  The  openmg 
of  new  land  to  labor  has  always  tended  to  increase  wages ,  and 
under  the  proposed  system  of  taxation  there  would  be  an  enor- 
mous increase'Tn  the  new  land  thus  opened  to  labor,  and  there^ 
fore  a  corresponding  increase  in  the  reward  of  labor.  Ihe  ettect 
upon  wages  would  be  precisely  that  which  would  be  produced  by 
"he  discovery  of  a  new  continent  of  fertile  and  healthy  land^ 

Real  wages  (in  other  words,  the  real  reward  of  labor)  would 
be  increased  to  a  much  greater  extent  than  nofmrml  wages  ^or 
while  wages,  expressed  in  forms  of  money,  must  rise,  as  already 
shown,  prices  of  the  good  things  which  wages  buy  would  fall, 
on  account  of  the  much  greater  production  of  ^uch  things  which 
would  result  from  the  immensely  greater  application  of  labor 
Td  capital  to  land.  More  than  this,  it  having  been  already 
shown  that  the  bulk  of  taxation  is  now  borne  by  the jvage-earn- 
ers,  and  that  the  whole  of  this  taxation  would  be  taken  off  their 
shoulders  by  the  new  system,  their  ff.  >"'=°,"«,.w°uW  be  prac- 
tically increased  by  the  full  amount  of  this  reduction  of  taxation 
the  effect  of  which  they  would  feel  in  a  general  reduction  of  the 

cost  of  living.  ^  .  „^^^ 

4.  Effect  on  money  wages.  — Tht  advance  in  money  wages 
must,  of  necessity,  be  rather  vaguely  estimated.  But  long  expe- 
rience has  furnished  abundant  means  for  trustworthy  calcula- 
tions. It  is  not  at  all  necessary  that  there  should  be  a  demand 
for  double  the  number  of  laborers,  to  double  the  rate  of  wages 
A  much  smaller  increase  in  the  demand  will  suffice,  so  long  as 
the  supply  of  labor  does  not  meet  the  demand. 

It  having  been  shown  that  the  taxation  of  ground  rents  would 
compel  their  owners  to  employ  labor  in  producing  something 
out  of  which  taxes  could  be  paid  while  the  release  of  the  great 
purchasing  class  from  heavy  taxation  would  enlarge  their  pur- 
chasing power,  it  follows  that  an  immediate  demand  for  labor 
would  arise,  in  excess  of  the  local  supply.    The  degree  to  which 


w 


104         The  Principles  of  Natural  Taxation 

wages  would  rise,  in  consequence  of  this  demand,  would  largely 
depend  upon  the  extent  of  the  field  over  which  the  new  system 
of  taxation  was  in  force.  The  adoption  of  just  taxation  in  a 
single  county,  or  even  in  an  entire  State,  would  cause  a  great  in- 
crease of  production  there ;  but  wages  would  be  kept  down,  to  a 
considerable  degree,  by  the  incoming  of  laborers  from  outside. 

5.  Immigration  and  wages.  —  But  the  adoption  of  just  tax- 
ation, throughout  the  United  States,  would  cause  a  rise  in  wages 
far  too  great  to  be  repressed  by  foreign  immigration.  Laborers 
of  all  kinds  have  never  yet  come  to  America  in  any  one  year,  to 
the  extent  of  even  one-twentieth  part  of  the  home  supply.  As 
the  new  arrivals  furnish  a  market  for  nearly  all  that  they  earn, 
they  do  not,  at  the  utmost,  furnish  an  element  of  competition  with 
native  laborers  in  excess  of  one-half  of  their  earnings.^  If,  there- 
fore, the  average  rate  of  American  wages  could  be  doubled,  by 
causes  having  a  permanent  operation,  immigration  might  con- 
tinue at  full  tide  for  many  years,  before  it  could  seriously  affect 
wages.  The  truth  of  this  theory  may  be  illustrated  by  the  case 
of  domestic  servants.  From  various  causes  their  average  wages 
in  the  United  States  have  much  more  than  doubled  since  i860. 
Those  who  then  received  $6  a  month  gould  now  readily  earn  $14, 
while  living  in  much  greater  comfort  and  having  much  easier 
work.  The  immigration  of  women  of  this  class  has  been  enor- 
mous ;  but  it  has  never  reduced  wages.  It  may  well  be  doubted 
whether  it  has  even  had  any  material  influence  in  preventing  a 
further  advance.  All  the  great  advance  in  the  wages  of  domes- 
tic servants  has  occurred  since  they  began  to  arrive  in  great 
numbers. 

We  may  safely  assume  that  any  rise  in  wages  which  would 
result  from  a  reform  in  taxation,  extending  over  the  whole  or 
the  larger  portion  of  the  United  States,  would  be  permanent, 
notwithstanding  any  probable  amount  of  immigration. 

6.  Amount  of  rise  in  wages.  —  As  the  purchasing  power 
of  laborers  would  be  increased  at  least  15  per  cent  from  the  in- 
stant at  which  taxes  were  taken  oflf  their  purchases,  an  increase 
of  demand  to  that  extent  may  be  assumed  as  certain,  subject  to 

*  Thus,  suppose  800,000  immigrants  to  arrive  in  one  year,  less  than  half 
of  them  would  be  competitors  for  wages.  Suppose  the  400,000  competing 
laborers  to  cam  $400  each.  They  would  spend  $350  of  this.  Half  of  this 
would  be  paid  in  wages  to  other  laborers,  producing  what  the  newcomers 
wanted.  Even  if  the  other  half  injuriously  affected  resident  laborers,  it 
would  amount  to  less  than  one  cent  in  each  dollar  of  their  annual  wages. 


Thomas  G.  Shearman,  1834-1900 


105 


such  reduction  of  demand  as  might  be  caused  by  the  reduced 
profits  of  the  not  more  than  50,000  families  who  would  suffer 
any  loss  of  income  through  the  new  taxation.  As  their  losses 
would  not  trench  upon  their  usual  fund  for  expenditure,  their 
purchases  would  fall  off  only  to  a  very  moderate  degree.  An 
allowance  of  $3,000  for  each  of  these  families  would  be  ample. 
This  would  amount  in  all  to  $150,000,000,  or  not  more  than  one- 
tenth  of  the  increase  in  the  purchasing  power  of  the  other  classes. 
After  making  large  allowance  for  a  saving  disposition  among  the 
poorer  classes,  under  their  new  prosperity,  it  is  impossible  to 
estimate  the  increase  in  purchases  at  less  than  10  per  cent,  or 
$1,000,000,000  per  annum.    It  would  probably  be  much  more. 

On  the  other  hand,  the  anxiety  of  landowners  to  put  their 
land  to  profitable  use,  the  absolute  release  of  all  productive 
industry  from  burden,  shackles,  and  restrictions,  the  untaxed 
money,  untaxed  manufactures,  untaxed  commerce,  untaxed  ag- 
riculture and  untaxed  credit  would  all  combine  to  give  a  sudden 
and  tremendous  stimulus  to  industry.  Production,  for  these  rea- 
sons alone,  could  not  fail  to  increase  immensely.  Adding  this 
consideration  to  the  other,  the  effective  demand  for  labor  could 
not  fail  to  increase  by  more  than  one-third ;  and  this  would  cause 
a  rise  in  wages  of  fully  100  per  cent. 

7.  Effect  on  capital. — The  owners  of  capital  will  naturally 
desire  to  know  how  their  interests  will  be  affected.  Will  not  the 
doubling  of  wages  diminish  the  profit  of  capital?  No.  On  the 
contrary  it  will  greatly  increase  that  profit. 

In  the  first  place,  it  must  be  remembered  that  ground  rents 
are  not  capital.  Correctly  speaking,  they  are  not  even  true  wealth. 
They  are  mere  taxes  upon  wealth  —  instruments  by  which  tribute 
can  be  exacted  from  wealth.  We  are  now  considering  only  gen- 
uine capital — true  wealth,  employed  in  the  reproduction  of 
wealth. 

In  the  next  place,  capital  necessarily  depends  for  its  profit 
upon  a  large  demand  for  its  productions.  Modern  capitalists  are 
fully  aware  that  great  gains  can  never  come  from  small  transac- 
tions, no  matter  how  large  the  profit  on  each  transaction  may  be. 
Sales  of  $1,000,000  at  a  profit  of  50  per  cent  are  of  small  ac- 
count, compared  with  sales  of  $100,000,000  at  a  profit  of  5  per 
cent.  The  number  of  those  who  live  without  their  own  labor  is 
and  must  be  always  and  everywhere  so  small,  compared  with  the 
vast  mass  of  mankind,  as  to  afford  an  insignificant  market  for 


■■  ^'4 


illi 


tf* 


|H' .: 


^."  ' .-  I 


106         The  Principles  of  Natural  Taxation 

the  enormous  production  of  modem  industry.  The  vast  ma- 
jority, who  labor  with  their  own  hands,  furnish  the  only  market 
worthy  of  consideration  for  modern  capital. 

This  great  majority  always  spend  the  larger  part  of  their 
earnings  j.  and  they  would  continue  to  do  so,  even  if  their  earn- 
ings were  doubled  or  trebled.  The  doubling  of  their  wages 
means,  therefore,  the  doubling  of  the  market  for  the  joint  pro- 
duction of  labor  and  capital.  It  means  the  doubling  of  the  gross 
profit  of  capital.  This  would  not  be  true  of  a  similar  increase 
of  income  to  any  other  class.  The  owners  of  rent  would  not 
double  their  purchases,  if  rent  were  doubled.  They  would  put 
much  of  their  surplus  into  capital,  competing  with  capital  already 
invested.  This  might  be  good  for  others  than  capitalists.  Yet, 
unless  it  brought  about  an  increase  of  wages,  it  would  not  in- 
crease the  demand  for  goods ;  and  so  it  would  not  increase  the 
profit  of  capital.  An  increase  of  wealth,  in  the  hands  of  the 
few,  leads  to  increased  wastefulness  in  the  nature  of  their  ex- 
penditures. Their  outlay  does  not  reproduce  capital.  The  out- 
lay of  the  working  classes  does.  Not  only  does  their  food  renew 
their  vigor,  but  even  their  amusements,  when  intelligently  di- 
rected, greatly  increase  their  productive  power  and  energy.  High 
wages  lead  not  only  to  cheap  production,  but  also  to  a  vast  in- 
crease of  production.  They  also  lead  immediately  to  a  corre- 
sponding increase  of  the  market  for  such  productions. 

There  is  no  conflict  of  interest  between  labor  and  capital, 
although  there  are  many  conflicts  of  interest  between  individual 
laborers  and  individual  capitalists.  The  lifting  of  all  taxation 
from  labor  and  capital  will  benefit  both. 

8.  Absolute  security  of  property. — When  taxation  is  levied 
exclusively  upon  ground  rent  every  man  will  have,  for  the  first 
time  in  human  history,  an  absolute  and  indefeasible  title  to  all  of 
his  property  which  is  the  production  of  human  skill  and  industry, 
subject  only  to  the  right  of  the  State  to  take  it,  upon  making  full 
compensation  for  its  value.  Such  compensation  would  enable 
the  owner  to  replace  the  property  thus  taken  with  other  property 
of  the  same  description  and  value.  This  general  right  of  the 
State  is  practically  no  limitation  upon  the  absolute  right  to  indi- 
vidual property. 

It  is  perfectly  plain  that  no  one  has  any  such  right  at  present, 
and  that  no  one  can  have  it,  under  any  existing  system  of  taxation. 
For,  so  long  as  the  State  assumes  the  right  to  tax  anything  be- 


Thomas  G.  Shearman,  1834-1900 


107 


i. 


sides  rent,  it  is  impossible  for  any  man  to  retain  the  entire  fruits 
of  his  own  industry.  Every  year  the  State  will  deduct  some- 
thing from  those  fruits,  under  the  name  of  taxation;  and  no 
one  can  ever  foresee  precisely  how  much  will  be  taken  in  this 
manner.  The  fluctuations,  both  in  the  amounts  and  methods  of 
such  taxes,  are  so  great  and  incalculable  that  no  one  can  have 
any  reasonable  certainty  as  to  the  extent  to  which  his  earnings 
will  be  secure  against  the  demands  of  the  State. 

But  if  taxes  were  once  confined  strictly  to  ground  rent,  all 
this  would  be  changed.  Chattels  of  every  description  would  of 
course  be  absolutely  secure ;  since  the  only  remedy  which  would 
be  allowed  to  the  State  for  the  collection  of  taxes  would  be  a  sale 
of  some  exclusive  privilege  on  land.  But  buildings  and  all  other 
improvements  on  land  would  be  equally  secure  against  all  taking 
without  compensation.  This  is  not  at  first  sight  so  clear ;  and  it 
needs,  therefore,  fuller  explanation. 

9.  Improvements  paid  for  on  tax  sales.  —  The  exclusive  tax 
upon  ground  rent  would  lose  its  entire  character  if  the  State  were 
allowed,  under  any  pretense,  to  collect  it  from  personal  property 
or  improvements.  It  is  a  fundamental  condition  of  such  a  tax 
that  it  be  collected  only  out  of  rent.  It  must,  therefore,  when 
payment  is  refused,  be  collected  only  by  selling  the  control  of 
the  taxed  land  to  some  person,  who  will  not  only  pay  the  tax, 
but  will  also  pay  to  the  landholder  thus  sold  out  the  full  value 
of  all  his  improvements.  If  no  one  will  pay  the  tax,^  subject  to 
those  conditions,  that  is  conclusive  proof  that  the  tax  is  too  high, 
and  that  it  is  in  reality  based  upon  an  assessment  including  other 
values  than  the  mere  value  of  the  land.  The  purchaser  in  such 
case  would,  of  course,  take  the  land,  subject  to  the  annual  liabil- 
ity for  taxes;  but  he  would  also  acquire  the  same  absolute  title 
to  improvements  which  the  previous  possessor  had;  so  that  he, 
in  turn,  could  not  be  sold  out  for  taxes  without  full  compensa- 
tion for  improvements.  Thus  no  one  would  ever  pay  taxes  upon 
the  value  of  any  other  property  than  the  bare  land. 

Universal  experience  has  demonstrated  that  there  would  not 
be  the  slightest  difficulty  in  carrying  such  a  system  into  practical 
operation.  This  system  has  long  been  in  operation,  upon  a  great 
scale,  both  in  public  and  private  affairs.  Wherever  ferry  fran- 
chises belong  to  a  municipality,  as  in  the  city  of  New  York,  such 
franchises  are  sold  at  auction,  at  intervals  of  five  or  ten  years, 
always  subject  to  two  conditions:  first,  the  payment  of  rent  to 


r 


108         The  Principles  of  Natural  Taxation 

V 

the  municipality ;  and  second,  the  payment  of  full  compensation 
to  the  former  holder  of  the  franchises,  for  boats,  piers,  houses, 
and  all  other  structures  and  materials  used  in  operating  the  ferry. 
Street  railway  franchises  are  sold  in  the  same  manner,  for  terms 
of  years,  by  every  honest  municipal  body  having  control  of  the 
subject.*  So  landlords  constantly  lease  their  land  for  terms  of 
years,  to  men  who  erect  expensive  buildings  thereon ;  the  land- 
lords covenanting  to  pay  the  value  of  such  improvements  upon 
the  expiration  of  the  lease.  There  is  no  more  difficulty  in  pro- 
viding for  an  annual  sale  of  land,  if  necessary,  subject  to  these 
conditions,  than  there  is  in  providing  for  a  sale  in  every  five,  ten, 
or  twenty  years.  A  ferry  franchise  is  just  as  much  a  title  to 
'*  land,"  within  the  meaning  of  law,  science  and  common  sense, 
as  is  any  other  land  title  whatever.^ 

Of  course  the  valuation  of  improvements  would  be  made 
upon  a  common-sense  basis.  The  landowner,  upon  making  de- 
fault in  taxes,  would  be  entitled  to  just  as  much  compensation 
for  his  buildings  as  those  buildings  really  added  to  the  market 
value  of  the  land  on  which  they  were  built,  but  no  more.  ^  If, 
as  often  happens,  an  expensive  building  had  been  put  up  in  a 
district  where  it  could  never  be  of  any  use,  nothing  should  be 
allowed  for  it  beyond  the  value  of  its  materials,  after  it  had  been 
pulled  down.  But  for  any  really  useful  building  compensation 
would  be  allowed,  sufficient  to  enable  the  owner  to  put  up  a  sim- 
ilar building,  in  similar  condition,  upon  an  adjoining  tract  of 
land.  In  short,  whatever  loss  the  owner  of  the  building  in- 
curred, by  reason  of  his  own  mistakes  or  extravagance,  he  would 
be  left  to  bear ;  but  whatever  value  belonged  to  the  building,  ex- 
clusive of  the  land  underneath  it,  he  would  invariably  be  allowed 
to  retain. 

lO.  The  railway  problem.  —  This  is  no  place  for  even  a 
full  statement  of  the  great  railway  problem,  with  its  almost  end- 
less branches.  Much  less  will  an  attempt  be  here  made  to  give 
it  a  complete  solution.  All  that  will  be  attempted  is  to  suggest 
the  close  connection  between  this  complicated  problem  and  the 
simple  one  of  taxation.  » 

*The  conception  of  a  realljr  incorruptible  city  council  will  seem,  to 
most  American  readers,  too  wildly  improbable  for  the  basis  of  even  a 
theory.  But  effete  Europe  is  so  far  behind  us,  in  the  grand  march  of  civ- 
ilization, that  such  Utopian  bodies  are  quite  common  there ;  and  the  method 
of  the  text  is  common  also. 

•  Benson  v.  New  York,  lo  Barbour,  223,  233. 


Thomas  G.  Shearman,  1834-1900 


109 


It  is  by  no  means  so  clear  as  it  seems  to  those  who  suffer 
from  them,  that  high  railway  rates  are  actually  unjust.  That 
which  is  unjust  in  such  cases  is  generally  the  fact  that  the  large 
profits  made  upon  such  transactions  are  in  the  nature  of  rent,  and 
equitably  belong  to  the  whole  community.  All  attempts  to  cor- 
rect this  apparent  injustice  have  thus  far  failed;  and  it  may  be 
worthy  of  inquiry  whether  this  failure  is  not  caused  by  some 
unrecognized  justice  in  the  system  complained  of.  May  it  not 
be  that  the  wrong  consists,  not  in  the  differential  rates,  but  in 
the  failure  of  the  government  to  collect  any  part  of  these  differ- 
ences for  public  use? 

Are  not  many  of  the  evils  complained  of  due  to  inflated  nom- 
inal values  and  fictitious  securities?  That  such  is  the  general 
opinion  is  strongly  indicated  by  the  stringent  prohibition  of  fic- 
titious stocks  and  bonds  in  the  new  constitutions  of  Illinois, 
Pennsylvania,  and  other  States  as  well  as  in  the  statutes  of  still 
more.  But  if  this  opinion  is  well  founded  the  concentration  of 
taxes  upon  land  privileges,  including  railway  franchises,  will 
practically  settle  that  question  by  taking  a  very  large  part  of 
such  inflated  values  for  public  use. 

The  complete  separation  between  the  ownership  of  the  road 
and  the  ownership  of  moving  stock,  proposed  by  Mr.  Hudson,^ 
would  seem  to  cover  all  the  remaining  ground.  Under  the  one  nat- 
ural tax  the  owners  of  the  road  would  be  taxed  in  proportion  to 
the  value  of  its  franchise,  but  the  owners  of  rolling  stock  would 
not  be  taxed  at  all.  All  persons  and  corporations  could  operate 
trains  upon  the  road,  subject  to  general  rules.  If  the  people  of 
any  place  were  charged  too  much  for  the  carriage  of  their  per- 
sons and  property,  they  could  put  their  own  trains  upon  the  road 
on  equal  terms  with  all  others.  This  was  the  original  railway 
idea,  and  it  has  been  abandoned,  not  because  it  is  really  imprac- 
ticable, as  railway  managers  pretend,  but  because  it  is  less  profit- 
able to  railway  companies  than  the  monopoly  which  is  created 
by  the  present  system. 

II.  Just  taxation  the  remedy  for  unjust  appropriation. — 
The  proposal  of  a  method  of  just  scientific  and  natural  tax- 
ation is  so  simple  and  unpretending  that  eager  social  reformers 
cannot  believe  it  possible  that  it  can  carry  with  it  any  cure  for 
the  evils  of  our  time.  They  point  to  the  unequal  distribution  of 
wealth,  the  growth  and  powers  of  monopolies,  the  watered  stocks 

^  Hudson,  J.  R,  The  Railways  and  the  Republic,  Harper  and  Bros.,  1886. 


110         The  Principles  of  Natural  Taxation 

and  bonds,  the  bribe-bought  franchises,  the  usurped  privileges, 
the  stolen  lands,  the  wholesale  appropriation  of  public  property 
to  private  use,  and  they  ask  how  it  can  be  possible  that  "  a  mere 
fiscal  reform"  can  bring  relief  from  any  of  these  evils.  Yet  it 
can.  No  great  upheaval  of  society  is  needed.  No  social  reor- 
ganization is  required.  No  general  state  assumption  of  the  ma- 
chinery of  production  is  either  necessary  or  desirable. 

It  is  continually  but  erroneously  denied  that  the  enormous 
fortunes  of  the  present  day  are  due  to  land  monopoly  or  to  meth- 
ods of  taxation.  Fortunes  of  considerable  extent  are  gained  by 
skill  and  genius,  and  there  is  no  good  reason  why  such  fortunes 
should  not  be  encouraged.  Bessemer,  Edison,  Bell,  and  other 
inventors  have  deserved  wealth,  and  the  capitalists  who  made 
their  inventions  possible  and  forced  them  upon  public  attention 
deserve  it  too.  But  all  the  unwieldy  fortunes,  and  all  which 
have  had  an  undesirable  origin,  owe  their  existence  to  some  form 
of  monopoly  which  could  not  have  existed  under  the  natural  sys- 
tem of  taxation. 

The  enormous  wealth  of  British  dukes  and  of  our  own  —  or 
lately  our  own  —  Astors  is  of  course  due  entirely  to  the  compar- 
ative exemption  of  ground  rents  from  taxation.  But  all  the  ex- 
cess of  wealth  gained  by  railway  kings,  above  a  liberal  compen- 
sation for  shrewdness,  sagacity,  and  foresight,  is  due  to  precisely 
the  same  cause.  It  has  been  shown  that  the  chief  value  of  rail- 
ways consist  in  exclusive  and  peculiar  privileges  upon  -land ;  and 
the  greatest  part  of  this  value  arises  from  its  comparative  ex- 
emption from  taxation. 

The  great  monopolies  which  have  grown  with  such  startling 
rapidity  into  such  overshadowing  power  owe  all  their  wealth 
and  power  to  their  manipulation  of  railways  and  of  duties  on  im- 
ports. Under  natural  taxation  there  would  be  no  import  duties 
to  manipulate,  and  the  railways  could  not  afford  to  be  manip- 
ulated. 

12.  "Watered  stocks"  —  Let  us  pass  to  the  consideration 
of  the  inflated  stocks  and  bonds  which  are  made  the  excuse  for 
extortion.  What  can  taxation  do  with  them?  The  answer  is  so 
plain  that  one  wonders  at  the  question.  Even  without  the  adop- 
tion of  the  full  reform  here  proposed  the  change  of  a  few  lines 
in  the  tax  laws  would  put  a  speedy  end  to  these  abuses.  If  all 
corporate  securities  were  made  subject  to  the  general  tax  rate 
at  their  full  nominal  value,  the  ** water"  would  be  let  out  of 


Thomas  G.  Shearman,  1834-1900 


111 


them  within  three  months.  "Yet  show  I  unto  you  a  more  ex- 
cellent way." 

Stock  inflation  does  not  really  enable  railways  to  charge  high 
rates.  The  Erie  line  cannot  charge  more  on  through  traffic  than 
the  Central.  And,  upon  the  whole,  those  who  use  railways  do 
not  pay  more  than  the  service  is  worth.  The  real  evil  is  that  a 
very  great  part  of  the  value  of  such  service  consists  in  the  use 
of  the  land  over  which  the  railway  runs,  that  this  portion  belongs 
to  the  public,  and  that  hardly  any  of  it  is  taken,  as  it  ought  to 
be,  for  public  use.  The  proper  remedy  is  not  to  give  service  to 
those  who  use  the  railways  for  less  than  it  is  worth,  but  to  use 
the  same  share  of  the  value  of  railway  land  for  public  purposes 
as  in  the  case  of  other  lands.  When  this  is  done  the  entire  people 
will  receive,  through  relief  from  other  taxation,  their  share  of 
the  value  which  they  have  given  to  the  railways.  And,  at  the 
same  time,  it  will  become  impossible  for  railway  companies  to 
maintain  inflated  stocks  and  bonds  because  to  do  so  would  be 
to  invite  greater  taxation  than  they  could  bear. 

13.  Corrupt  grants.  —  So  as  to  bribe-bought  franchises.  It 
would  be  quite  unnecessary  to  rescind  them.  It  would  only  be 
necessary  to  tax  them  on  the  basis  of  their  true  value,  which  is 
pure  ground  rent.  Thus  American  street  railroads,  which  gener- 
ally owe  their  franchises  to  the  grossest  corruption  and  which 
charge  fares  of  five  or  ten  cents  for  a  service  which  costs  less 
than  half  that  sum,  need  not  be  interfered  with.  Under  a  proper 
system  of  taxation  it  would  make  little  difference  whether  the 
fares  were  reduced  or  not.  If  the  fares  were  reduced  to  three 
cents,  ground  rents  would  be  increased,  and  the  city  would  derive 
greater  revenue  from  its  taxes  on  those  rents.  If  the  fares  re- 
main unchanged,  the  value  of  the  railroad  franchise  would  be 
so  much  greater,  and  the  tax  upon  that  would  be  greater  in  pro- 
portion. It  would  make  little  difference  even  to  those  who  trav- 
eled in  the  cars.  If  the  fares  were  reduced,  the  travelers  would 
have  to  pay  more  rent  for  their  homes.  Thus  they  would  con- 
tribute as  much  to  the  public  funds  in  one  way  as  in  the  other. 

At  first  sight  it  would  seem  that  the  redress  thus  obtained 
would  be  very  inadequate.  But  it  would  not.  Of  course,  no 
past  wrong  can  be  entirely  obliterated.  No  scheme  of  social  re- 
form seriously  proposes  to  secure  compensation  for  all  the  past. 
The  world  does  not  contain  wealth  enough  to  pay  damages  for 
all  past  injuries.    But  the  taxation  of  all  franchises,  on  the  basis 


112  The  Principles  of  Natural  Taxation 

of  their  present  fair  market  value  with  the  concentration  of  all 
taxes  upon  ground  rents,  of  which  these  are  a  part,  would  take 
for  the  public  benefit  all  that  the  public  could  have  secured  under 
the  most  honest  and  impartial  sale  of  such  franchises.  It  will 
also  tax  those  corporations  which  obtained  their  grants  for  noth- 
ing just  so  much  more  than  it  will  tax  those  which  paid  a  fair 

price. 

14.     Taxation   the   best  remedy  for  past  corruption.-;- tor 
these  franchises  could  not,  upon  the  average,  have  been  originally 
sold  for  more  than  they  would  now  pay  under  such  taxation.    If 
they  had  been  sold  at  auction  for  a  sum  in  cash,  free  of  taxation, 
they  would  never  have  brought  a  sum  which,  however  well  in- 
vested, would  produce  an  income  equal  to  the  average  annual 
tax.     If  new  franchises  should  be  sold,  free  of  taxation,  to  the 
highest  bidder  for  an  annual  payment,  that  payment,  in  the  long 
run,  would  rarely,  if  ever,  equal  the  taxes  which  would  be  paid 
under  this  system.    Therefore  it  would  be  better,  in  the  long  run, 
to  give  these  franchises  to  the  corporations  which  will  give  the 
best  security  for  the  best  and  cheapest  public  service  than  to 
sell  them  to  the  highest  bidder  either  for  a  single  or  an  annual 
payment.     Indeed  to  sell  them  for  a  single  present  payment  is 
obviously  a  bad  method.     It  confines  competition  to  a  very  few 
men  of  great  wealth,  depriving  the  municipality  of  the  better 
service,  which  less  wealthy  but  more  energetic  men  would  prob- 
ably render ;  it  cripples  the  operation  of  the  franchise  by  impair- 
ing the  capital  of  the  managers ;  and  it  pours  into  the  public 
treasury  a  large  sum,  which  cannot  be  well  invested,  and  which 
is  an  almost  irresistible  temptation  to  extravagance  and  waste. 
And  those  corporations  which  have  obtained  valuable  fran- 
chises for  nothing,  except  bribes,  will  necessarily  be  taxed  more 
heavily  than  those  which  are  already  subject  to  an  annual  pay- 
ment.   Thus  the  Broadway  Railroad,  in  New  York  City,  is  subject 
to  an  annual  payment  of  $40,000.    The  real  annual  value  of  its 
franchise  (obtained  by  paying  aldermen  $20,000  each)  is  so  much 
more  than  $400,000  that  this  figure  may  be  taken  as  an  extremely 
moderate  one.    Assuming  that  to  be  correct,  the  taxable  value  ot 
this  franchise  would  be  reduced  to  $360,000  by  this  liability  to  an 
annual  payment.    If  another  charter,  equally  valuable,  should  be 
granted  in  a  parallel  street,  for  nothing,  its  taxable  value  would 
be  the  full  $400,000.    Supposing  half  of  such  value  to  be  taken  by 
taxation,  half  the  amount  gained  by  bribery  would  be  recovered. 


Thomas  G.  Shearman,  1834-1900 


113 


Under  the  present  system,  every  conceivable  method  for  recover- 
ing the  loss  sustained  by  the  community  through  such  schemes 
of  corruption  has  been  tried,  without  the  slightest  success.  Even 
if  the  adoption  of  just  taxation  should  only  recover  half  of  a  just 
compensation  for  the  franchises  corruptly  given  away,  that  is  a 
thousand  times  more  than  has  ever  yet  been  recovered,  and  ten 
times  more  than  ever  can  be  recovered  in  any  other  way. 

15.  Usurped  Lands.  — Take  the  case  of  usurped  or  stolen 
lands.  In  Great  Britain,  the  lords  of  the  manor,  having  had  con- 
trol of  Parliament  for  centuries,  have  stolen  vast  quantities  of 
land  from  the  people,  under  the  forms  of  law.  In  the  United 
States,  vast  tracts  of  land  have  been  taken  up,  under  forged 
grants  or  under  perjured  testimony.  Spanish  grants  are  a  by- 
word, and  the  homestead  law  has  been  perverted  into  the  most 
successful  scheme  for  buying  government  land  at  a  fourth  of  its 
value  which  could  have  been  devised.  It  ought  to  be  entitled: 
"  An  Act  to  prohibit  the  purchase  of  land  by  honest  men,  and 
to  encourage  monopoly  and  perjury."  Railroad  lands,  to  the 
amount  of  hundreds  of  millions  of  acres,  have  been  obtained  for 
nothing,  except  a  few  beggarly  bribes  to  Congressmen  and  State 
legislators,  amounting  in  all  to  less  than  a  ten-thousandth  part 
of  the  market  value.  What  then?  Shall  we  sue  in  the  courts 
for  relief  ?  None  could  be  had,  without  laying  down  rules  of  law, 
which  would  be  ruinous  to  innocent  purchasers  all  over  the  land. 
Shall  we  pass  confiscatory  laws?  The  Constitution  forbids,  and 
if  it  did  not,  our  own  consciences  would  revolt  at  the  idea.  There 
is  no  possible  relief  in  that  direction. 

Great  Britain  has  no  written  constitution,  and  her  Parliament 
has  unlimited  power.  Shall  Parliament  direct  the  confiscation 
of  the  old  common  lands?  Shall  it  undertake  to  reclaim  literal 
possession  of  "the  land  for  the  people"?  Let  us  not  waste 
time  in  discussing  the  question  on  moral  grounds.  Rightly  or 
wrongly  the  moral  sense  of  the  people  would  revolt  at  such  a 
proposition.  And  if  it  did  not,  yet  the  immense  complications 
involved  in  awarding  compensation  for  improvements  would 
break  down  the  whole  project.  It  is  not  worth  while  to  inquire 
into  the  abstract  morality  of  an  utterly  impracticable  scheme. 

But  in  Great  Britain  and  America  alike  the  adoption  of  a 
just,  natural,  and  uniform  method  of  taxation  would  give  an 
immediate  remedy.  Without  confiscation,  without  violence,  with- 
out any  social  upheaval,  it  would  take  for  public  use  about  half 


iiii 


114         The  Principles  of  Natural  Taxation 

of  the  revenue  thus  misappropriated,  which  is  no  more  than 
ought  to  be  taken,  in  any  case,  while  it  is  far  more  than  can 
ever  be  obtained  in  any  other  way. 


« 


The  best  remedy  for  injustice  is  simple  justice/* 


i6.  Reform  in  government.  —  By  this  time,  it  is  hoped,  the 
attentive  reader  will  have  begun  to  see  that  the  adoption  of  nat- 
ural taxation  leads,  by  an  easy  course,  to  reform  in  all  methods 
of  government  and  the  abolition  of  corruption  in  public  office, 
by  removing  most  inducements  to  corruption.  It  would  nearly 
extirpate  the  bribery  of  legislatures  and  councils  by  leaving  noth- 
ing for  anyone  to  gain  by  offering  bribes.  Not  absolutely,  of 
course.  It  cannot  be  too  often  repeated  that  nothing  in  this 
world  is  or  ever  will  be  perfect.  But  this  reform  in  taxation 
would  remove  most  of  the  present  inducements  to  bribery,  false- 
hood and  fraud  in  public  affairs. 

17.  Abolition  of  fraud  and  bribery  in  tax  matters.  —  The 
most  prolific  sources  of  these  evils  are  directly  connected  with 
bad  methods  of  taxation.  Every  change  in  laws  imposing  taxes 
upon  commodities,  either  by  a  tariff  or  by  excises,  affects  so  many 
private  interests  that  all  parties  agree  in  charging  wholesale 
bribery  and  corruption  upon  each  other,  and  none  seriously 
claim  to  be  innocent.  This  branch  of  the  subject  has  already 
been  sufficiently  treated.  The  innumerable  frauds  and  perjuries 
which  arise  out  of  the  taxation  of  personal  property  have  also 
been  referred  to.  All  these  abominations  would  disappear,  with 
the  acceptance  of  natural  taxation.  Nobody  would  be  required 
to  make  any  return  of  his  wealth,  and  no  attention  would  be 
paid  to  it  if  he  made  any.  There  would  be  but  one  thing  to 
be  taxed,  and  its  value  would  be  ascertained  by  independent  in- 
vestigation. Valuations  of  land  might  be  compared  with  the 
rents  actually  paid,  but  those  rents  would  be  learned  by  inquiry 
among  tenants,  not  among  landlords.  Large  landowners  might 
attempt  to  bribe  assessors,  as  they  do  now.  But  the  value  of 
land  is  so  easily  determined  that  other  landowners  could  be  pro- 
vided with  an  ample  remedy  in  an  application  to  the  courts  to 
make  assessments  just  and  uniform. 

18.  Special  local  assessments  dispensed  with.  —  The  com- 
plex system  of  special  assessments  for  local  improvements,  which 
is  indispensable  under  all  existing  methods  of  taxation,  with  its 
allowance  for  "betterments,"  to  use  a  current  English  term, 


Thomas  G.  Shearman,  1834-1900 


115 


i 


would  become  unnecessary.  All  improvements  could  be  made  at 
the  common  expense  because  whatever  improvement  might  thus 
be  made  in  the  value  of  adjoining  property  would  all  be  an  in- 
crease in  the  value  of  the  mere  land,  and  this  addition  would 
lead  at  once  to  a  permanent  increase  in  the  tax  upon  that  land 
to  a  proportionate  amount.  Such  assessments  have  always  been 
a  fertile  source  of  injustice,  inequality  and  fraud.  They  are,  in- 
evitably, largely  based  upon  guesswork,  whereas  the  subsequent 
taxation  would  be  measured  by  actual,  known  values. 

19.  Bribery  made  unprofitable.  —  The  most  appalling  devel- 
opments of  crime  in  American  government,  however,  have 
taken  place  with  regard  to  the  grants  of  special  privileges  on 
land,  especially  to  railway,  gas,  electric  hght,  and  similar  com- 
panies. The  notorious  robbery  of  the  United  States  by  the  Union 
Pacific  and  Central  Pacific  companies  to  an  amount  exceeding 
$100,000,000  is  only  one  of  many  instances,  although  the  most 
prominent  one.  The  repeated  purchase  of  the  Broadway  Rail- 
road franchise  from  corrupt  aldermen  and  legislators,  repeatedly 
set  aside  by  the  courts,  has  attracted  more  attention  than  hun- 
dreds of  similar  crimes.  But  every  street-railroad  franchise  in 
New  York  has  certainly  been  procured  in  precisely  the  same 
way,  and  probably  every  such  railroad  in  the  country,  the  fran- 
chise of  which  was  worth  anything,  was  chartered  upon  similar 
terms.  Gas  companies,  electric  light  companies,  and  steam  heat- 
ing companies  all  pay  heavy  bribes  for  permission  to  lay  their 
pipes  or  wires  in  city  streets. 

The  taxation  of  all  these  franchises  at  their  full  value,  on  the 
same  basis  with  other  privileges  over  land,  would  make  it  impos- 
sible to  obtain  them  for  nothing.  No  bargains  with  aldermen 
could  relieve  them  from  paying  handsomely  for  their  annual 
value.  There  would  no  longer  be  an  eager  crowd  of  bribe- 
offerers,  and  therefore  the  crowd  of  bribe-takers  would  cease 
to  buy  their  way  into  municipal  government.  The  bribes  offered 
to  aldermen  would  be  too  small  to  repay  the  aldermen's  bribes 
to  their  electors.  Such  franchises  would  be  generally  given  to 
those  who  would  accept  them  on  terms  most  favorable  to  the 
public,  with  respect  to  low  charges,  good  accommodation,  and 
faithful  service.  No  money  would  be  paid,  either  to  the  munici- 
pality or  to  the  aldermen ;  for  taxes  would  have  to  be  paid,  and 
they  would  automatically  increase  as  the  value  of  the  franchises 
increased. 


I  ij 


iiii 


116         The  Principles  of  Natural  Taxation 

20.  The  tenement-house  problem.  —  The  rapid  increase  of 
low-class  tenement  houses  in  large  American  cities,  especially 
in  New  York,  has  excited  the  just  anxiety  and  alarm  of  our  most 
thoughtful  citizens.  Many  plans  of  restriction  and  regulation 
are  urged.  They  all  aim  at  results  which  are  eminently  desirable. 
But  they  all  involve  large  expenses,  which  must  be  finally  borne, 
under  our  present  methods  of  taxation,  by  the  very  tenants  whose 
extreme  and  degrading  poverty  is  the  very  cause  of  the  difficulty. 
It  is  perfectly  true  that  such  houses  do  not  afford  sufficient  space 
and  air  to  sustain  health.  It  is  often  true  that  they  do  not  fur- 
nish accommodations  necessary  to  maintain  decency,  although 
much  has  been  done  of  late  years  to  improve  them  and  to  keep 
them  under  careful  inspection.  But  every  good  thing  is  costly ; 
and  who  is  to  pay  the  cost?  If  the  landlord  is  forced  by  law 
to  provide  better  accommodations,  he  must  charge  more  rent  for 
the  house ;  and  it  has  been  already  shown  that  he  can,  in  the 
long  run,  compel  the  payment  of  such  additional  rent,  because, 
if  he  could  not,  no  more  tenement  houses  would  be  built  until 
tenants  were  able  and  willing  to  pay  a  fair  rate  of  interest  upon 
all  the  cost  of  building  such  houses,  including  all  compulsory 
improvements.  . 

Or  suppose  that  the  cost  of  such  improvements  is  paid  by 
the  government.  The  expense  would  be  paid  out  of  taxes.  Who 
would  pay  the  taxes?  A  full  share  would  fall  upon  these  very 
houses;  and,  as  the  cost  of  such  improvements  when  made  by 
the  city  would  be  far  greater  than  it  would  be  if  they  were  made 
by  the  landlord,  the  probabiHty  is  that  the  tax  upon  the  class  of 
houses  thus  State-repaired  would  be  nearly  as  great  as  the  cost 
of  private  repair  would  be.  Be  it  more  or  less,  this  tax  must  be 
finally  paid  by  the  tenants.  And  in  this  event,  a  large  share  of 
the  tax  would  fall  upon  other  buildings,  occupied  by  a  class  but 
little  less  poor  than  the  occupants  of  tenement  houses,  and  thus 
they  would  be  dragged  down  into  actual  poverty. 

The  next  result  would  be  that  the  tenement  dwellers  would 
be  so  impoverished  by  the  increase  of  their  rents  as  to  deprive 
them  of  some  portion  of  the  food  or  clothing  which  they  had  with 
difficulty  managed  to  provide  under  the  original  rent.  All  of 
them  would  suffer  inconvenience,  most  of  them  would  suffer 
actual  privation;  their  earning  power  would  be  reduced,  and 
many  of  them  would  be  driven  out  altogether  by  the  bidding  of 
other  tenants  who  had  previously  occupied  houses  or  parts  of 


Thomas  G.  Shearman,  1834-1900 


117 


houses  of  a  slightly  higher  grade,  which  they  had  been  compelled 
to  give  up  by  the  pressure  of  taxation,  or  which,  while  they  were 
much  better  than  the  tenements  had  been  before  tenements  were 
reformed,  were  no  better  than  the  reformed  and  improved 
tenements. 

Any  compulsory  improvements  of  this  kind  must  inevitably 
make  the  lot  of  the  lower  class  —  the  "  residuum,"  as  it  is  called  — 
harder  than  ever. 

As  usual,  it  will  be  said  that  "  this  is  all  theory."  Unfortu- 
nately, it  is  a  theory  which  was  never  much  thought  of  until 
practical  experience  called  attention  to  it.  The  dwellings  of  the 
poor  have  been  torn  down  and  rebuilt  with  improvements,  upon 
a  large  scale,  in  Paris,  London,  BerHn,  and  other  cities,  and 
always  with  precisely  these  results.  Those  who  occupied  the 
old,  condemned  buildings  did  not  return  to  the  new  ones.  They 
simply  could  not  afford  it.  Their  places  were  taken  by  others, 
who  had  always  occupied  rather  better  homes,  and  who  were 
driven  by  increased  taxation  to  descend  a  step  in  the  social  scale, 
finding  in  the  new  dwellings  homes  not  quite  equal  to  their  old 
abodes,  but  much  better  and  more  expensive  than  the  buildings 
which  had  been  destroyed  as  unhabitable.  The  "  residuum  *'  were 
driven  into  more  degraded  conditions  than  those  under  which 
they  previously  lived. 

21.  Its  solution.  —  Must  we,  then,  abandon  all  hope  of 
improvement  in  the  homes  of  the  poor?  Not  at  all.  While 
insisting  upon  renovations  and  necessary  improvements,  let  us 
remove  all  taxes  from  houses.  This  will  make  houses  more 
abundant ;  this  will  make  house  rents  cheaper ;  this  will  enable 
house  owners  to  furnish  necessary  improvements  without  increas- 
ing rents  or  losing  interest  on  their  investments. 

Let  us  work  out  an  illustration.  Twenty  thousand  dollars  is 
a  reasonable  estimate  for  the  price  of  many  tenement  houses  in 
New  York;  half  for  the  house  and  half  for  the  land.  Houses 
being  usually  assessed  for  70  per  cent  of  their  full  value,  the 
house,  as  distinguished  from  the  land,  would  be  assessed  at  $7,000 
and  taxed,  at  present  rates,  $133.  If  this  tax  were  taken  off, 
representing,  as  it  does,  a  capital  of  about  $2,600,  the  owner 
could  afford  to  spend  $2,000  on  improvements  without  raising 
the  rent,  and  yet  make  a  profit.  Competition  with  other  house 
owners  would  eventually  compel  him  either  to  spend  about  as 
much,  or  else  to  reduce  his  charge  for  the  house  by  more  than 


w 


m 


ii> 


i 


118         The  Principles  of  Natural  Taxation 

$100  a  year.  Legislation  might  hasten  his  action  or  require  him 
to  make  the  improvements,  instead  of  lowering  his  rent.  In 
either  case  the  tenants'  condition  would  be  greatly  improved. 

Without  deciding  that  no  other  reform  is  necessary  or  desir- 
able, it  is  at  least  demonstrated  by  long  and  wide  experience  that 
no  permanent  and  complete  reform  of  the  tenement  house  is 
possible  without  first  abolishing  all  taxes  on  buildings. 

22.  Summary  of  conclusions.  —  The  adoption  of  natural 
taxation  would  obviously  relieve  the  great  mass  of  the  people 
from  all  taxes  and  tax-burdens  whatever,  except  rent,  which  they 
now  pay,  in  addition  to  taxes. 

It  would  put  an  end  to  that  artificial  concentration  of  wealth 
in  the  hands  of  a  few,  which  is  now  making  such  rapid  progress. 

While  leaving  natural  inequalities  in  human  skill,  intelligence, 
industry,  and  productive  power  to  produce  their  natural  effects 
in  moderate  inequalities  of  wealth,  it  would  gradually  remove 
those  unnatural  and  monstrous  inequalities  which  now  exist,  with 
no  benefit  to  anyone  and  with  vast  injury  to  society  as  a  whole. 

It  would  put  a  premium  upon  improvement  and  industry,  by 
relieving  them  from  double  taxation;  while  it  would  lay  such 
burdens  upon  mere  "  dogs  in  the  manger "  as  would  drive  them 
into  productive  industry. 

It  would  secure  to  the  owner  of  every  product  of  human 
industry  and  skill  an  absolute  and  indefeasible  title  to  such 
property,  so  that  it  could  not  be  taken  from  him,  even  for  taxes, 
without  full  compensation  for  its  market  value;  a  title,  there- 
fore, far  superior  to  any  which  can  now  be  held  by  any  human 

being. 

It  would  increase  the  demand  for  human  labor  in  the  pro- 
duction of  good  things  for  human  use,  to  the  utmost  possible 
limit,  thus  causing  a  general  rise  in  wages  of  at  least  50  per  cent, 
and  more  probably  100  per  cent. 

It  would  relieve  wages  from  all  present  forms  of  taxation, 
thus  increasing  the  net  income  of  laborers,  at  once  and  forever, 
by  at  least  15  per  cent  more.  Whether  "times"  were  good  or 
bad,  wages  high  or  low,  the  net  income  of  every  laborer  would 
always  be  at  least  15  per  cent  higher  than  it  could  possibly  be 
under  the  present  system,  at  similar  periods. 

It  would  encourage  capital  to  free  investment,  by  relieving  it 
from  all  fear  of  punishment  for  enterprise,  under  the  name  of 
taxation. 


Thomas  G.  Shearman,  1834-1900 


119 


It  would  solve  the  American  currency  problem,  by  opening 
banks  of  deposit  in  every  nook  and  comer,  free  of  taxation; 
thus  giving  to  every  farmer  precisely  the  same  facilities  for 
exchange  as  are  enjoyed  by  the  wealthiest  merchant  or  manu- 
facturer, and  making  a  large  supply  of  either  coin  or  notes 
superfluous. 

It  would  largely  reduce  the  share  of  taxes  paid  by  farmers, 
because  their  share  of  ground  rent  is  smaller  than  is  that  of  other 
landowners;  while  it  would  not  increase  the  present  burdens 
upon  residents  of  towns  and  cities,  since  they  would  pay  nothing 
but  rent,  and  that  they  pay  now,  in  addition  to  taxes. 

It  would  remove  all  shackles  from  commerce,  trade,  manu- 
factures, agriculture,  and  industry  of  every  kind,  giving  them  a 
stimulus  such  as  they  have  never  known. 

It  would  throw  open  to  all  men  some  land,  upon  which  they 
could  make  a  living,  without  requiring  them  to  invest  any  capital 
in  its  purchase,  and  at  no  greater  rent  than  they  could  reasonably 

afford  to  pay.  . 

It  would,  therefore,  enormously  increase  the  production  and 
weahh  of  the  nation,  while  securing  a  fair,  though  not  literally 
equal,  distribution  of  that  wealth. 

It  would  reform  government,  by  lifting  the  masses  out  of 
the  degrading  conditions  which  make  them  an  easy  prey  to  cor- 
rupt influences,  by  removing  all  temptation  to  fraud  in  matters 
of  taxation,  and  by  destroying  the  chief  inducements  to  the 
corruption  of  legislatures  and  councils. 

It  would  not  at  once  make  men  moral,  industrious,  or  intelli- 
gent; it  would  not  give  to  any  man  a  dollar  which  he  did  not 
earn  for  himself ;  it  would  not  open  any  "  royal  roads  "  to  wealth ; 
for  "  royal "  ways  are  ways  of  idleness. 

But  it  would  open  fair  and  equal  opportunities  to  men  of 
equal  capacity  and  industry;  and  it  would  remove  nearly  all 
artificial  hindrances  to  the  success  of  the  honest,  intelligent,  and 
industrious. 


,» 


part  13 

SIDE-LIGHTS 


h 


\  I 


CHAPTER  IX 

A  Burdenless  Tax :  The  Threefold  Support  Upon  Which 

the  Single  Tax  Rests 


A.    THE   FIRST   LEG   OF  THE   SINGLE-TAX   TRIPOS 
THE   SOCIAL   ORIGIN    OF   GROUND   RENT 

Ground  rent,  what  land  is  worth  annually  for  use,  is  a  creation 
of  the  community,  a  social  product  —  all  local  taxes  are  spent 
upon  those  things  which  make  and  maintain  ground  rent. 

I.  Definition  of  ground  rent,—(i)  Ground  rent  is  what 
land  is  worth  for  use  —  economic  rent.  (2)  Strictly  speak- 
ing, the  "  worth  for  use  "  attaches  not  to  the  land  itself,  but  to 
scores  of  things  exterior  to  the  land  and  through  it  available 
for  use,  so  that  the  following  is  a  fuller  description : 

Gross  ground  rent — economic  rent  —  the  annual  site  value 
of  land  —  what  land  is  worth  annually  for  use  —  what  the 
land  does  or  would  command  for  use  per  annum  if  offered  in 
open  market — the  annual  value  of  the  exclusive  use  and  con- 
trol of  a  given  area  of  land,  involving  the  enjoyment  of  those 
"rights  and  privileges  thereto  pertaining"  which  are  stipu- 
lated in  every  title  deed,  and  which,  enumerated  specifically, 
are  as  follows :  right  and  ease  of  access  to  water,  health  in- 
spection, sewerage,  fire  protection,  police,  schools,  libraries, 
museums,  parks,  playgrounds,  steam  and  electric  railway  serv- 
ice, gas  and  electric  lighting,  telegraph  and  telephone  serv- 
ice, subways,  ferries,  churches,  public  schools,  private  schools, 

123 


Mil 


124         The  Principles  of  Natural  Taxation 

colleges,  universities,  public  buildings  —  utilities  which  de- 
pend for  their  efficiency  and  economy  on  the  character  of  the 
government;  which  collectively  constitute  the  economic  and 
social  advantages  of  the  land  independent  of  any  quality  or 
content  of  the  ground  or  land  itself,  and  which  are  due  to  the 
presence  and  activity  of  population,  and  are  inseparable  there- 
from, including  the  benefit  of  proximity  to,  and  command  of, 
facilities  for  commerce  and  communication  with  the  world  — 
an  artificial  value  created  primarily  through  public  expendi- 
ture of  taxes.  For  the  sake  of  brevity,  the  substance  of  this 
definition  may  be  conveniently  expressed  as  the  value  of 
"proximity/*  It  is  ordinarily  measured  by  interest  on  invest- 
ment plus  taxes. 

2.  The  nature  of  ground  rent. — ^As  defined  by  Mr.  Shear- 
man, ground  rent  is,  in  its  nature,  "  a  tribute  which  natural 
laws  levy  upon  every  occupant  of  land  as  the  market  price  of 
all  the  social  as  well  as  natural  advantages  appertaining  to  that 
land,  including  necessarily  his  just  share  of  the  cost  of  govern- 
ment." It  is  found  operative  in  every  civilized  country,  auto- 
matically collecting  "  from  every  citizen  an  amount  almost 
exactly  proportionate  to  the  fair  and  full  market  value  of 
the  benefits  which  he  derives  from  the  government  under 
which  he  lives  and  the  society  which  surrounds  him."  It  is  a 
tribute,  "a  tax,  just,  equal,  full,  fair,  paid  for  full  value 
received." 

It  is  not  merely  a  tax  which  justice  allows ;  it  is  one  which 
"justice  demands.  It  is  not  merely  one  which  ought  to  be  col- 
lected ;  it  is  one  which  infallibly  will  be  and  is  collected.  It  is 
not  merely  one  which  the  State  ought  to  see  collected ;  it  is  one 
which,  in  the  long  run,  the  State  cannot  prevent  being  collected. 
....  Seldom  has  there  been  a  more  beautiful  illustration  of  the 
wise  yet  relentless  working  of  natural  law  than  in  the  proved 
impossibility  of  justly  collecting  any  tax  other  than  upon  ground- 


A  Burdenless  Tax 


125 


rent.    It  shows  that  nature  makes  it  impossible  to  execute  justly 
a  statute  which  is  in  its  nature  unjust. 

This  definition  of  Mr.  Shearman's  is  offered  as  one  difficult 
to  be  improved  upon  or  condensed. 

Such,  it  may  be  added,  is  the  nature  of  rent  —  ground 
rent — that  all  the  public  and  private  improvements  of  a  com- 
munity today  are  reflected  in  the  land  values  of  that  commu- 
nity. Not  only  this,  but  the  value  of  all  those  ideal  public 
improvements  conceived  of  as  being  possible  under  Utopian 
conditions  would  be  similarly  absorbed,  as  it  were,  in  the 
ground,  would  be  reflected  in  its  site  value.  Stand  before  a 
big  mirror  and  you  will  see  your  image  perfectly  reflected  be- 
fore you.  If  you  are  a  man  scantily,  shabbily  clad,  so  is  the 
image  in  the  glass.  The  addition  of  rich  and  costly  attire  is 
imaged  in  the  glass.  Load  yourself  with  jewels  and  fill  your, 
hands  with  gold :  in  the  mirror,  true  to  nature,  is  the  image 
and  likeness  of  them  all.  Not  more  perfectly,  nor  more  liter- 
ally, is  your  image  reflected  in  the  mirror,  than  are  public  im- 
provements reflected  in  the  value  of  the  land.  • 

One  peculiarity  in  the  nature  of  ground  rent  to  which  we 
urge  your  attention  is  the  subtle  relation  existing  between  this 
natural  income  and  the  artificial  outgo  of  the  public  taxes  —  a 
relation  not  unlike  that  of  cause  and  effect,  by  which  the  wise 
expenditure  of  the  tax  contributes,  in  a  manner  especially 
direct,  to  the  element  of  ground  rent. 

Simple  illustrations  may  help  to  open  the  mind  to  a 
consideration  of  whatever  may  seem  novel  or  strange  in  the 
restatement  of  a  familiar  truth.  For  instance:  The  cook 
turns  the  crank  of  her  coffee  mill ;  the  whole  coffee  that  was  in 
the  hopper  comes  out  ground  coffee,  but  it  is  coffee  just  the 
same.    The  Minneapolis  miller  lets  on  the  water  that  turns  the 


I 


.11 


ivi. 


I 


126        The  Principles  of  Natural  Taxation 

crank  of  his  flour  mill ;  the  wheat  that  goes  into  the  hopper 
comes  out  flour,  wheat  in  a  more  subtle  form.  The  people 
turn  the  crank  of  a  great  tax  mill ;  the  taxes  that  go  into  the 
hopper  come  out  ground  rent,  no  tax  quality  lost,  no  rent  in- 
gredient added. 

Or  again :  The  myriad  springs  and  rivulets  of  the  great 
Mississippi  are  continuously  delivering  themselves  in  one  great 
river  to  the  sea.  Suppose  that  some  day  you  should  read  in 
the  weather  bulletin  that  nature  had  decided  to  suspend  the 
regular  return  of  these  waters  in  clouds  and  rain  and  dew  to 
their  point  of  departure.  How  long  would  it  be  before  the 
Mississippi  Valley  would  be  as  parched  and  dry  as  the  Desert 
of  Sahara,  or  the  North  End  of  the  city  of  Boston,  or  the 
East  Side  of  the  city  of  New  York  ? 

Or,  more  pertinent  still,  because  more  vital:  The  con- 
stant round  of  taxes  and  ground  rent  is  the  blood  circulation 
of  the  body  politic.  When  the  heart  throws  out  the  life  blood 
through  the  arteries,  if  that  blood  does  not  return  through  the 
veins,  the  patient  dies  — not  of  heart  failure,  but  from  loss  of 
blood.  When  the  public  heart  charges  the  arteries  of  the  land 
with  ground  rent,  if  that  ground  rent  does  not  return,  the  body 
politic  is  prostrated  or  enervated  by  loss  of  blood.  The  body 
politic  today,  like  a  man  with  a  ravenous  appetite,  is  cleaning 
its  plate  of  all  the  millions  a  year  that  it  can  earn,  and  mort- 
gaging the  future  for  nearly  as  much  more,  always  eating, 
yet  always  hungry,  and  simply  because  the  best  part  of  its 
millions  of  dollars'  worth  of  arterial  life  blood,  instead  of 
coming  back  to  the  public  heart,  ebbs  rapidly  away  through 
severed  blood  vessels  in  the  private  appropriation  of  ground 

rent. 

These  illustrations  of  the  miscarriage  of  a  beneficent  pro- 
vision seem  to  hint  strongly  at  the  true  theory  of  ground  rent. 


A  Burdenless  Tax 


127 


as  waiting  to  be  naturally  developed  under  a  natural  law,  and 
as  a  natural  social  product. 

J.  The  operation  of  ground  rent.  —  Critical  consideration 
is  invited  to  Mr.  Shearman's  statement  that  the  operation  of 
ground  rent  is  to  exact  from  every  user  of  land  the  natural 
tribute  which  he  ought  to  pay  in  return  for  the  perpetual  pub- 
lic and  social  advantages  secured  to  him  by  his  location,  a 
part  of  which  natural  tribute  now  goes  to  the  State  in  the  form 
of  a  tax,  and  the  remainder  to  the  land-owner  in  the  form  of 
rent.  Objection  to  monopolies  and  special  privileges  is  that 
they  participate  in  the  private  appropriation  of  an  undue  share 
of  this  natural  tribute,  and  while  recognizing  that  in  the  end 
all  quasi-public,  as  well  as  all  public  service,  should  be  at  the 
least  practicable  cost  to  the  people,  it  is  held  that  meantime 
whatever  monopoly  is  enjoyed  should  be  obliged,  through 
taxation,  to  repay  to  the  public  a  full  and  fair  equivalent  for 
the  privilege  conceded  to  it. 

The  monopolies  and  special  privileges  which  should 
properly  share  with  land  values  the  burden  of  taxation  may  be 
partially  enumerated  as  follows :  the  private  appropriation  of 
natural  resources  such  as  gold,  silver,  copper,  iron,  and  coal 
mines,  oil  fields,  and  water  powers;  all  franchises  of  steam 
and  electric  railways;  all  other  public  franchises,  granted  to 
one  or  several  persons  incorporated,  from  which  all  other  peo- 
ple are  excluded,  and  which  include  all  "rights,  authority,  or 
permission  to  construct,  maintain,  or  operate  in,  under,  above, 
upon,  or  through  any  streets,  highways,  or  public  places,  mains, 
pipes,  tanks,  conduits,  or  wires,  with  their  appurtenances  for 
conducting  water,  steam,  heat,  light,  power,  gas,  oil,  or  other 
substance,  or  electricity  for  telegraphic,  telephonic,  or  other 
purposes."  * 

*  Quoted  from  the  Ford  Franchise  Tax  Act  of  New  York. 


#  ^— • 


128         The  Principles  of  Natural  Taxation 

4.  The  office  of  ground  rent,  —  The  true  office  of  ground 
rent  is  that  of  a  board  of  equalization — equalization  of  taxa- 
tion, of  distribution,  and  of  opportunity.  The  tendency  of  an 
increase  in  the  tax  upon  ground  rent  is  not  only  to  equalize 
taxation  and  distribution,  but  to  equalize  the  opportunity  of 
access  to  those  social  services  attached  to  the  land.  In  this 
clear  distinction  between  land  and  land  value,  which  cannot 
be  too  critically  noted,  may  there  not  be  found  an  explosion 
of  the  notion  that  a  man  has  a  right  to  the  private  appropria- 
tion of  ground  rent,  because  his  forefathers  bought  and  paid 
for  the  land  fifty  or  one  hundred  years  ago? 

The  question  is:  When  he  bought  the  land  fifty  or  one 
hundred  years  ago,  did  he  buy  and  pay  for  the  land  value  of 
today?  In  1686  a  company  having  five  shares  and  five  stock- 
holders bought  a  lot  of  land  in  Philadelphia  for  $5.  In  1900 
the  same  company,  with  its  five  shares  and  five  stockholders, 
sold  the  value  of  the  same  land  for  $1,000,000.  Does  it 
sound  reasonable  to  say  that  for  one  pound  sterling  in  1686 
these  five  men  bought  and  paid  for  the  $1,000,000  land  value 
of  1900,  with  its  ground  rent  of  $40,000  a  year?  Would  not 
such  a  sale  in  1686  of  goods  to  be  delivered  two  hundred 
and  fourteen  years  later  be  dealing  in  futures  with  a  ven- 
geance? True  it  is  that  the  land  sold  today  is  the  same  land 
bought  in  1686.  But  it  is  just  as  true  that  its  value  today 
is  not  the  value  of  the  land  itself,  but  is  the  value  of  the 
rights  and  privileges  pertaining  thereto,  and  exterior  to  the 
land  itself.  The  demand  that  enhances  land  value  is  not  for 
land  itself,  but  for  the  command  of  these  same  rights  and 
privileges. 

Land  value  being  a  social  creation,  and  rent  being  socially 
maintained,  equal  access  to  the  rights  and  privileges  pertain- 
ing to  the  land  can  be  promoted  by  the  taxation  of  ground 


A  Burdenless  Tax 


129 


rent,  and  by  this  means  only.  Ground  rent,  the  natural 
tax  feeder,  extracts  from  the  user  of  land  the  exact  measure 
of  his  advantage  over  other  men  in  his  exclusive  enjoyment 
of  rights  and  privileges  pertaining  to  his  own  location,  and  the 
whole  tendency  of  the  taxation  of  ground  rent  is  to  equalize 
participation  in  these  common  rights  and  privileges,  by  com- 
muting into  dollars  and  cents,  which  can  be  divided,  those 
indivisible  advantages  of  location,  which  can  only  be  enjoyed 
individually.  Whatever  of  rent  goes  into  the  public  treasury 
tends  to  a  fairer  distribution  of  produce  in  wages  earned. 
Whatever  of  taxation  is  transferred  from  other  wealth  to 
ground  rent  leaves  so  much  more  wealth  to  be  distributed 
in  wages. 

Again,  it  is  submitted  that  the  true  office  of  ground  rent 
is  to  offer  a  communal  shoulder  suited  to  bear  all  the  burden 
of  common  needs,  leaving  produce — current  wealth  —  to  be 
distributed,  as  fast  as  produced,  in  wages  and  interest,  the  total 
volume  of  which  will  always  be  increased  by  the  amount  of 
rent  appropriated  through  the  taxation  of  whatever  of  eco- 
nomic rent  there  is  in  special  privilege. 

Ground  rent  being  a  social  product,  is  not  its  private 
appropriation  a  special  privilege? 

5.  The  cause  of  ground  rent.  —  The  dimensions,  as  well 
as  the  continuous  character  of  the  contribution  made  by  the 
people  to  the  growth  and  volume  of  ground  rent,  are  seldom 
measured — by  many  persons  hardly  suspected.  Almost  any- 
thing else  that  he  owns,  except  land,  a  man  may  appropriate, 
destroy,  tear  down,  burn  down,  remove,  consume,  change  in 
form,  wear  out.  To  the  land  itself  he  cannot  do  any  of  these 
things.  The  value  of  its  use  is  ground  rent,  an  annual  value, 
which  is  all  that  the  owner  of  land  can  consume.  The  land 
value  itself  survives,  and  usually  intact. 


Ii ) 


130         The  Principles  of  Natural  Taxation 

Ground  rent  may  be  said  to  result  from  at  least  three  dis- 
tinct causes,  all  connected  with  aggregated  social  activity :  ^ 

(i)  Public  expenditure:  All  wise  public  expenditures 
are  direct  feeders  of  ground  rent.  Streets,  lights,  water, 
sewerage,  fire  and  police  systems,  public  schools,  libraries, 
museums,  parks  and  playgrounds,  all  contribute  to  enhance  the 
value  of  land,  and  a  corresponding  depreciation  would  follow 
the  abolition  of  any  of  these  systems.  It  follows,  therefore, 
that  expenditure  for  maintaining  these  services  constitutes  the 
maintenance  of  ground  rent,  if  not  in  a  literal  sense,  at  least 
in  an  all-sufficient  common  sense. 

(2)  Quasi-Public  expenditure :  In  the  same  way,  the  ex- 
penditure by  the  municipality  or  by  private  corporations  for 
steam  and  electric  railways,  gas  and  electric  lights,  telegraph 
and  telephone  facilities,  subways  and  ferries,  contributes  to 
the  value  of  land,  at  least,  to  the  extent  of  their  actual  cost. 

(3)  Private  expenditure:  Equally,  and  by  parity  of  rea- 
soning, private  or  voluntary  social  expenditure  for  churches, 
private  schools,  colleges  and  universities,  all  private  buildings, 
apartment  houses,  stores,  and  office  buildings,  contributes  to 
ground  rent,  the  annual  value  of  land. 

In  an  enumeration  of  the  causes  of  ground  rent,  popula- 

*A  question  for  the  future  to  decide.  —  For  the  sake  of  argument,  let 
there  be  assumed  the  following  hypothesis : 

Ground  rent  is  due  to  three  principal  causes  in  proportion  as  follows: 
(i)  to  Public  Expenditure,  say  one-half,  (2)  to  Quasi-Public  Expenditure, 
say  one-quarter,  (3)  to  Private  Expenditure,  say  one-quarter. 

Queries :  ( i )  Would  not  the  right  of  the  community  to  the  first  half 
ht  beyond  dispute?  (2)  Would  the  community  have  as  full  a  right  to  the 
third  quarter  as  to  the  first  half?  (3)  Would  not  private  enterprise  and 
expenciiture  have  a  larger  right  in  the  last  quarter  than  in  the  other  parts? 
In  practice  would  not  justice  and  fact  coincide,  because  the  greater  the 
private  improvement,  the  greater  the  profit  to  the  private  improver  through 
exemption  of  his  improvement. 

No  present  discussion  of  the  foregoing  hypothesis  is  invited;  it  is  sug- 
gested only  as  food  for  thought  when  the  time  shall  come,  if  ever,  to 
decide  the  exact  percentage  of  rent  that  ought  to  be  absorbed  by  taxation. 


A  Burdenless  Tax 


131 


tion  is  usually  the  one  first  named.  But  a  passive  population 
gives  little  value  to  land;  it  is  rather  the  activities  consequent 
upon  the  character  of  population  that  create  the  value. 

It  is  generally  conceded  that,  as  a  matter  of  fact,  ground 
rent  is  what  land  is  worth  annually  for  use;  but  it  is  of  far 
greater  importance  to  understand  clearly  what  is  the  source 
of  that  worth,  and  especially  to  what  extent  it  may  be  re- 
garded as  a  social  product.  Inasmuch  as  all  the  contributions 
representing  social  activities,  so  far  as  enumerated,  are  paid 
for  from  the  treasuries  of  the  people,  it  is  correct  and  proper 
to  say  that  ground  rent  is  chiefly  and  peculiarly  a  social 
product. 

6.  The  maintenance  of  ground  rent.  —  So  far  as  the  cost 
of  streets,  lights,  water,  sewerage,  fire,  police,  schools,  libraries, 
museums,  parks,  playgrounds,  steam  and  electric  railways,  gas 
and  electric  lights,  telegraph  and  telephone  companies,  sub- 
ways, ferries,  churches,  private  schools,  colleges,  universities, 
public  buildings,  well-appointed  houses,  stores,  and  office  build- 
ings is  what  constitutes  the  cost  of  land  value,  just  so  far 
the  maintenance  of  all  this  public  or  social  service  constitutes 
the  maintenance  of  ground  rent. 

A  simple  illustration  may  help  to  an  appreciation  of  the 
absurd  absence  of  a  true  economy  in  tax  affairs  today.  A 
landlord  owns  a  factory  which  requires  steam  power,  and 
which  is  useless  and  worthless  without  it.  Another  man  owns 
a  steam  plant,  and  furnishes  steam  to  factories  at  so  much 
per  horse  power.  The  man  who  hires  and  uses  the  factory 
pays  factory  rent  to  his  landlord,  who  furnishes  the  factory, 
and  steam  rent  to  the  man  who  furnishes  the  steam.  He 
would  smile  if  you  should  talk  to  him  about  paying  his  steam 
rent  to  the  landlord  who  does  not  furnish  it.  In  vivid  contrast 
with  this  sensible  performance  we  may  take  the  case  of  another 


132         The  Principles  of  Natural  Taxation 

landlord  who  owns  a  store,  requiring  public  service  and  con- 
venience, and  useless  without  it.  The  municipality  owns  and 
runs  a  public  service  plant,  and  furnishes  public  service  at  a 
cost  of  so  much  per  thousand  dollars*  worth.  The  man  who 
hires  and  uses  the  store  pays  store  rent  to  his  landlord,  who 
furnishes  the  store,  but,  by  a  strange  perversion,  he  pays  his 
public  service  rent  to  the  same  landlord.  Should  he  not  pay 
his  public  service  rent  to  the  public  that  furnishes  it? 

Inasmuch  as  all  these  contributions  to  its  maintenance,  so 
far  as  enumerated,  are  from  the  treasuries  of  the  people,  what 
can  ground  rent  possibly  be,  if  it  is  not  a  social  product? 

7.  An  illustration:  the  ground  rent  of  Boston.  —  A  dense 
skepticism  and,  indeed,  a  denser  ignorance,  seem  to  obtain 
even  in  regard  to  the  simple  fact  that  there  is  such  a  thing  as 
ground  rent,  and  yet  much  more  in  regard  to  what  is  the 
volume  of  gross  ground  rent.  It  has  been  questioned  whether 
the  ground  rent  of  the  city  of  Boston,  for  instance,  under  the 
single  tax,  with  the  accompanying  shrinkage  in  speculative 
values,  would  exceed  today  5  per  cent  on  the  assessed  valuation 
of  land,  or  $32,000,000.  Indications  are  that  the  net  rent  of 
the  land  itself  might  not,  but  our  investigations  are  directed 
to  ascertaining  not  the  net,  but  the  gross,  ground  rent,  which 

is  net  rent  plus  the  taxes. 

In  a  systematic  attempt  to  dispel  these  clouds  of  ignorance 
and  skepticism  —  now  to  be  found  in  surprisingly  high  places 
—  and  to  demonstrate  beyond  a  reasonable  doubt  about  how 
much  gross  ground  rent  there  is  in  the  city  of  Boston,  actual 
sales  for  the  year  1902  and  actual  rentals  have  been  collected 
from  official  sources. 

One  hundred  and  twenty  pieces  of  real  estate  in  various 
sections  of  the  city  are  shown  to  have  been  sold  at  prices 
averaging  one-fifth  higher  than  their  assessed  valuation,  indi- 


A  Burdenless  Tax 


133 


eating  that  at  least  in  these  one  hundred  and  twenty  cases  the 
valuations  were  less  than  five-sixths  of  the  selling  price. 

Seven  hundred  and  fifty-one  rentals  of  estates,  together 
with  their  assessed  valuations,  averaging  $47,680  each,  were 
also  obtained  from  reliable  sources.  In  the  total  for  these  it 
is  found  that  the  net  rent  is  5  per  cent  (4.8)  and  the  gross 
rent — net  rent  plus  taxes — is  6  per  cent  of  the  assessed 
valuation. 

Based  upon  this  indicated  ratio  the  gross  ground-rent  of 
Boston  is,  by  a  conservative  estimate,  not  less  than  fifty  or 
fifty-five  million  dollars. 


The  valuation  of  Boston's  land  in  1887  was 
The  value  of  the  same  land  in  1907  was 


$322,000,000 
653,000,000 


Thus  the  increase  in  the  valuation  of  land  in  twenty 

years  was $331,000,000 

Five  per  cent  on  this  twenty  years!*  increase  of  $S3i, 000,000 
would  he  $16,^50,000,  which,  added  to  the  $4,300,000  assessed 
upon  the  land  in  188^,  would  he  $20,800,000,  as  compared 
with  Boston's  taxes  of  $21,254,000  in  1907. 

Those  who  agree  with  John  Stuart  Mill  that  it  would  be 
sound  public  policy  and  no  injustice  to  landowners  to  take 
for  public  purposes  the  future  increase  in  ground  rent  will  be 
interested  to  note  what  an  opportunity  for  putting  such  a  plan 
in  operation  in  Boston  is  shown  by  the  foregoing  figures  to 
have  been  lost  twenty  years  ago. 

The  fifty-five  millions  are,  we  submit,  the  "income"  in 
very  truth  earned  by  the  city  and  people  of  Boston — created 
by  their  actual  labor  and  actual  expenditure.  Under  the  single 
tax  Boston  would  pay  all  its  current  expenses  out  of  this 
legitimate  $55,000,000  income  of  its  own,  earned  by  itself, 
instead  of  allowing  $40,000,000  more  or  less  of  this  amount 


w 


134         The  Principles  of  Natural  Taxation 

to  be  divided,  through  the  channel  of  privilege,  into  unearned 
incomes,  thus  aggravating  those  inequalities  in  distribution  of 
wealth  which  people  are  wont  to  declaim  against  as  partial 
and  wrong. 

While  that  part  of  the  ground  rent  of  Boston  that  goes 
to  individuals  may  be  said  to  be  unearned,  having  been  pro- 
duced by  society,  it  may  truthfully  be  said  to  be  earned  by 
society,  and  hence  it  may  go  to  it  as  its  wages,  just  as  properly 
as  his  earnings  go  to  the  individual  who  works  for  wages. 


B.    THE  SECOND   LEG  OF  THE   SINGLE-TAX  TRIPOS 
THE  NON-SHIFTABILITY  OF  A  LAND  TAX 

A  tax  upon  ground  rent  cannot  be  shifted  upon  the  tenant  by 
increasing  the  rent.  If  it  could,  the  selling  value  of  land  would 
not  be  reduced,  cls  it  now  is,  by  the  capitalised  tax  that  is  imposed 
upon  it. 

The  question  is  whether,  if  a  new  tax  should  be  put  upon 
land,  the  owner  would  not  escape  by  adding  it  to  his  ten- 
ant's rent. 

It  is  not  a  sufficient  answer  to  quote  the  authorities.  The 
query  still  remains :  What  are  the  arguments  upon  which  the 
authorities  rely?  Following  is  an  attempt  at  the  clear  state- 
ment which  these  arguments  deserve. 

Ground  rent,  "  what  land  is  worth  for  use,"  is  determined, 
not  by  taxation,  but  by  demand.  Ground  rent  is  the  gross 
income,  what  the  user  pays  for  the  use  of  land;  a  tax  is  in 
the  nature  of  a  charge  upon  this  income,  similar  to  the  in- 
cumbrance of  mortgage  interest.  It  is  a  matter  of  everyday 
knowledge  that  even  though  land  be  mortgaged  nearly  to  its 
full  value,  no  one  would  think  for  a  moment  that  the  owner 
could  rid  himself  of  the  mortgage  interest  that  he  has  to  pay 
through  raising  his  tenant's  rent  by  a  corresponding  amount. 


A  Burdenless  Tax 


135 


Mortgage  interest  is  a  lien  held  by  an  individual ;  similarly  a 
tax  may  be  clearly  conceived  as  a  lien  held  by  the  State.  Both 
affect  the  relation  between  the  property  owner  and  lien  holder; 
neither  has  any  bearing  upon  the  relations  between  owner 
and  tenant.  "Tax"  is  simply  the  name  of  that  part  of  the 
gross  ground  rent  which  is  taken  by  the  State  in  taxation,  the 
other  part  going  to  the  owner;  the  ratio  these  two  parts  bear 
to  one  another  has  no  effect  upon  the  gross  rent  figure,  which 
is  always  the  sum  of  these  two  parts,  viz.,  net  rent  plus  tax. 
The  greater  the  tax,  the  smaller  the  net  rent  to  the  owner,  and 
vice  versa.  Ground  rent  is,  as  a  rule,  "all  the  traffic  will 
bear  " ;  that  is,  the  owner  gets  all  he  can  for  use  of  his  land, 
whether  the  tax  be  light  or  heavy.  Putting  more  tax  upon 
land  will  not  make  it  worth  any  more  for  use,  will  not  increase 
the  desire  for  it  by  competitors  for  its  tenancy,  will  not  in- 
crease its  market  value. 

To  illustrate,  let  us  consider  the  case  of  a  piece  of  land 
for  which  the  landowner  gets  $i,ooo  rent  from  the  man 
who  uses  it. 

(i)  The  owner,  let  us  say,  pays  over  to  the  city  in 
taxes  $  I  GO  of  this  $i,ooo  rent.  Is  there  any  indication  that 
this  $ioo  tax  has  any  influence  in  fixing  the  present 
rent  at  $i,ooo? 

(2)  Let  us  suppose  that  next  year  the  city  decides  to 
take  another  $100  of  the  $1,000  rent  in  taxes.  Could  the 
owner  then  add  the  $200  tax  to  the  tenant's  rent,  making- 
it  $1,200? 

(3)  Let  us  suppose  that  the  following  year  the  tax  is 
increased  by  another  $100  and  so  on,  by  an  annual  increase, 
until,  for  extreme  illustration,  the  tax  is  $1,000,  an  amount 
equal  to  the  entire  rent;  would  such  a  condition  make  it  pos- 
sible for  the  owner  to  raise  his  tenant's  land  rent  to  $2,000? 


iikii 


136         The  Principles  of  Natural  Taxation 

These  questions  would  seem  to  answer  themselves  in  the 
negative,  and  thus  bring  us  to  a  fair  conclusion  in  the  matter. 

WHAT  THE  AUTHORITIES  SAY  OF  THIS  SECOND  LEG  OF  THE  SINGLE- 
TAX  TRIPOS,  THAT  A  TAX  UPON  ITS  RENT  CANNOT  BE  SHIFTED 

The  weight  of  authority  upon  such  a  question  is  worthy  of 
attention,  although  by  no  means  decisive.  Now,  while  a  few 
respectable  and  sincere  students  of  economic  science  hold  to  the 
doctrine  of  transferability  of  the  ground-rent  tax  to  the  tenants, 
no  one  will  dispute  that  an  overwhelming  weight  of  authority, 
both  in  numbers  and  in  reputation,  scout  that  doctrine  as  absurd. 
Not  only  the  entire  school  of  Ricardo  and  Mill,  but  also  nine- 
tenths  or  more  of  other  economic  writers  make  it  a  fundamental 
doctrine  of  their  science  that  such  a  tax  never  can  be  trans- 
ferred to  tenants.  —  Thomas  G.  Shearman,  Natural  Taxation, 
pp.  129-32. 

Though  the  landlord  is  in  all  cases  the  real  contributor,  the 
tax  is  commonly  advanced  by  the  tenant,  to  whom  the  landlord 
is  obliged  to  allow  it  in  payment  of  the  rent.  —  Adam  Smith, 
The  Wealth  of  Nations,  Book  v,  chap.  11,  Part  2,  art.  i. 

A  land  tax,  levied  in  proportion  to  the  rent  of  land,  and 
varying  with  every  variation  of  rent,  is  in  effect  a  tax  on  rent; 
and  such  a  tax  will  not  apply  to  that  land  which  yields  no  rent, 
nor  to  the  produce  of  that  capital  which  is  employed  on  the 
land  with  a  view  to  profit  merely,  and  which  never  pays  rent: 
it  will  not  in  any  way  affect  the  price  of  raw  produce,  but  will 
fall  wholly  on  the  landlords.  —  Ricardo,  The  Principles  of  Politi- 
cal Economy  and  Taxation,  McCulloch's  edition,  p.  107. 

A  tax  on  rent  would  affect  rent  only ;  it  would  fall  wholly  on 
landlords,  and  could  not  be  shifted.  The  landlord  could  not 
raise  his  rent,  because  he  would  have  unaltered  the  difference 
between  the  produce  obtained  from  the  least  productive  land  in 
cultivation,  and  that  obtained  from  land  of  every  other  quality.  — 
Ricardo,  The  Principles  of  Political  Economy  and  Taxation, 
chap.  X,  sec.  62. 

A  tax  on  rents  falls  wholly  on  the  landlord.    There  are  no 

means  by  which  he  can  shift  the  burden  upon  anyone  else 

A  tax  on  rent,  therefore,  has  no  effect  other  than  its  obvious  one. 
It  merely  takes  so  much  from  the  landlord  and  transfers  it  to  the 
State.  —  John  Stuart  Mill,  The  Principles  of  Political  Economy, 
Book  V,  chap,  iii,  sec.  2. 


A  Burdenless  Tax 


137 


The  power  of  transferring  a  tax  from  the  person  who  actually 
pays  it  to  some  other  person  varies  with  the  object  taxed.  A 
tax  on  rents  cannot  be  transferred.  A  tax  on  commodities  is 
always  transferred  to  the  consumer.  —  Thorold  Rogers,  Political 
Economy,  2d  ed.,  chap,  xxi,  p.  285. 

A  land  tax  levied  in  proportion  to  the  rent  of  land,  and  vary- 
ing with  every  variation  of  rents,  ....  will  fall  wholly  on  the 
landlords.  —  Francis  A.  Walker,  Political  Economy,  ed.  of  1887, 
p.  413,  quoting  Ricardo  approvingly. 

A  tax  laid  upon  rent  is  borne  solely  by  the  owner  of  land. — 
J.  Bascom,  Treatise,  p.  159. 

Some  of  the  early  German  writers  on  public  finance,  such  as 
Sartorius,  Hoffman,  and  Murhard,  went  so  far  as  to  declare 
that,  because  of  this  capitalization,  a  land  tax  is  no  tax  at  all. 
Since  it  acts  as  a  rent  charge  capitalized  in  the  decreased  value 
of  the  land,  they  argue,  a  land  tax  involves  a  confiscation  of  the 
property  of  the  original  owner.  On  the  other  hand,  since  the 
future  possessors  would  otherwise  go  scot  free,  it  becomes  neces- 
sary to  levy  some  other  kind  of  a  tax  on  them.  —  E.  R.  A. 
Seligman,  Shifting  and  Incidence  of  Taxation,  p.  139. 

The  incidence  of  the  ground  tax,  in  other  words,  is  on  the 
landlord.  He  has  no  means  of  shifting  it ;  for,  if  the  tax  were 
to  be  suddenly  abolished,  he  would  nevertheless  be  able  to  extort 
the  same  rent,  since  the  ground  rent  is  fixed  solely  by  the  demand 
of  the  occupiers.  The  tax  simply  diminishes  his  profits. — 
E.  R.  A.  Seligman,  Shifting  and  Incidence  of  Taxation,  pp.  244, 
245. 

If  land  is  taxed  according  to  its  pure  rent,  virtually  all  writers 
since  Ricardo  agree  that  the  tax  will  fall  wholly  on  the  land- 
owner, and  that  it  cannot  be  shifted  to  any  other  class,  whether 

tenant-farmer  or  consumer The  point  is  so  universally 

accepted  as  to  require  no  further  discussion A  permanent 

tax  on  rent  is  thus  not  shifted  to  the  consumer,  nor  does  it  rest 
on  the  landowner  who  has  bought  since  the  tax  was  imposed. — 
E.  R.  A.  Seligman,  Shifting  and  Incidence  of  Taxation,  pp.  222, 
223. 

With  these  assumptions,  it  is  quite  clear  that  the  tax  on 
economic  rent  cannot  be  transferred  to  the  consumer  of  the 
produce,  owing  to  the  competition  of  the  marginal  land  that 
pays  no  rent,  and  therefore  no  tax,  nor  to  the  farmer,  since 
competition  leaves  him  only  ordinary  profits. 


f 


Hi-  , 

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t 


138         The  Principles  of  Natural  Taxation 

The  amount  of  each  particular  rental  depends  upon  units 
of  surplus  produced  (varying  to  any  extent  according  to  the 
superior  natural  conditions),  and  on  the  marginal  price,  which 
is  independent  of  these  superior  conditions,  and,  accordingly,  a 
tax  that  strikes  the  surplus  only,  remains  where  it  first  falls. — 
J.  S.  Nicholson,  Principles  of  Political  Economy,  Book  v,  chap. 
XI,  sees.  I  and  4. 

C.      THE    THIRD   LEG  OF   THE   SINGLE-TAX    TRIPOS 
THE  ULTIMATE  BURDENLESSNESS  OF  A  LAND  TAX 

Every  landowner  is  exempt  from  taxation  on  his  investment, 
to  the  extent  of  the  tax  to  which  his  land  was  subject  at  time  of 
his  purchase,  and  therefore,  practically  speaking,  nearly  all  land 
is  today  owned  free  of  any  tax  burden. 

The  purpose  of  the  following  illustration  is  to  make  clear 
by  means  of  iteration  and  reiteration  two  facts,  viz. : 

Fact  I.  The  landowner  of  today  who  has  purchased 
since  the  present  tax  was  imposed  escapes  taxation  upon  his 
investment. 

Fact  2.  The  burden  of  a  land  tax  cannot  be  made  to 
survive  a  change  of  ownership. 

The  illustration  is  intended  to  show  the  effect  in  a  normal 
or  advancing  community  of  mortgage  interest  and  taxes  upon 
the  market  value  and  cost  to  the  user  of  a  lot  of  land  and  a 
house  respectively  having  equal  purchase  and  rental  value, 
and  each  subject  to  the  same  mortgage  interest  and  taxes. 
First:    The  land. — 

Proposition  i .  —  Let  it  be  supposed  that  you  want  a  piece 
of  urban  land  that  is  worth  $soo  a  year  to  you  for  use.  You 
can  afford  to  pay  $300  a  year  and  no  more,  and  it  can  be  had 
at  an  annual  cost  of  $300  a  year. 

Let  us  then  proceed  to  acquire  this  piece  of  land,  exer- 
cising diligence  and  caution  to  profit  by  each  step  in  the 
transaction. 


A  Burdenless  Tax 


139 


(a)  At  the  very  outset  the  question  arises,  what  is  the 
thing  for  which  you  are  proposing  to  pay  $300  ?  Surely  it  is 
not  the  soil  itself,  because  it  is  a  question  of  a  building  site, 
which  could  be  had  out  in  the  country  for  little  or  nothing. 
It  is  not  merely  the  area  upon  which  to  dig  a  hole  in  the 
ground,  wall  it  about,  and  erect  a  building,  for  the  same  space 
can  be  had  elsewhere  for  a  song.  In  short,  it  is  not  the  earth's 
surface;  it  is  not  the  inherent  capabilities  of  the  soil;  it  is 
not  light  and  air,  or  other  bounties  of  nature  resident  in  that 
lot  of  land;  it  is  not  natural  resources  of  which  you  are  think- 
ing as  worth  to  you  $300  a  year. 

(b)  But  what  you  are  going  to  pay  for  is  the  accompany- 
ing and  incidental  use  of  a  great  many  expensive  things  out- 
side of  the  piece  of  land,  things  which  you  will  need  and  must 
have,  which  you  cannot  afford  to  provide  at  your  own  expense, 
but  for  the  use  of  which  you  can  afford  to  pay  in  proportion  as 
you  use  them.  It  is  these  outside  things,  available  by  their 
proximity,  for  which  you  are  called  upon  to  pay  $300  a  year. 
To  enumerate  again,  specifically,  they  are,  in  a  town  or  city 
lot,  right  and  ease  of  access  to  water,  health  inspection,  sewer- 
age, fire  protection,  police,  schools,  libraries,  museums,  parks, 
playgrounds,  steam  and  electric  railway  service,  gas  and  electric 
lighting,  telegraph  and  telephone  service,  subways,  ferries, 
churches,  public  schools,  private  schools,  colleges,  universities, 
public  buildings  —  utilities  which  depend  for  their  efficiency 
and  economy  on  the  character  of  the  government ;  which  col- 
lectively constitute  the  economic  and  social  advantages  of  the 
land;  and  which  are  due  to  the  presence  and  activity  of  popula- 
tion, and  are  inseparable  therefrom,  including  the  benefit  of 
proximity  to  and  command  of  facilities  for  commerce  and 
communication  with  the  world  —  an  artificial  value  created 
primarily  through  public  expenditure  of  taxes.    In  practice,  the 


'H 


140         The  Principles  of  Natural  Taxation 

term  "  land  "  is  erroneously  made  to  include  destructible  ele- 
ments which  require  constant  replenishment;  but  these  form  no 
part  of  this  economic  advantage  of  situation  or  site  value. 

(c)  In  other  words,  you  are  to  pay  $300  a  year  for  the 
value  of  what  the  law  calls  the  "  rights  and  privileges  thereto 
pertaining,"  specified  in  every  deed  of  land  conveyance.  This 
$300  is  ground  rent,  "  what  the  land  is  worth  for  use." 

Proposition  2. — Assuming  this  piece  of  land  to  he  free 
from  all  charges  and  incumbrances,  and  assuming  the  current 
rate  of  interest  to  he  5  per  cent  per  annum,  you  would  pur- 
chase the  lot  for  $6,000,  hecause  interest  upon  that  sum  would 
amount  to  the  stipulated  $joo  a  year.  But  if,  on  the  contrary, 
the  lot  hears  a  mortgage  of  $2,000,  upon  which  the  annual 
interest  charge  is  $100,  then  the  lot  will  cost  you  $4,000. 

(a)  The  mortgage  interest  charge  of  $100  reduces  the 
selling  price  of  the  land  by  the  amount  of  the  mortgage,  $2,000, 
and  you  will  buy  the  land,  not  at  $6,000,  but  at  $4,000,  the 
value  of  the  equity  remaining  after  mortgage  interest  has 
been  paid. 

(b)  By  purchasing  title  you  will  assume  the  mortgage 
and  will  pay  the  mortgage  interest,  $100,  but  that  $100  will 
not  come  out  of  your  $200,  the  net  income  from  your  invest- 
ment of  $4,000;  it  will  come  out  of  the  gross  income,  the 
ground  rent,  $300.  It  is  a  part  of,  and  not  an  addition  to,  the 
ground  rent.  You  will  pay  the  interest,  but  you  will  not  bear 
it,  because  you  will  have  bought  yourself  clear  of  the  burden. 

(c)  The  lot  will  thus  cost  you  annually  for  use:  interest 
on  your  purchase  price  ($4,000  at  5  per  cent),  $200,  plus 
mortgage  interest  ($2,000  at  5  per  cent),  $100,  equal  in  all  to 
$300,  all  that  the  land  is  worth  for  use,  use  being  the  only 
relation  of  land  to  man  with  which  economics  has  reasonable 
concern. 


A  Burdenless  Tax 


141 


Proposition  ^.-—But,  besides  being  subject  to  a  mortgage 
of  $2,000,  assume  further  that  this  lot  of  land  is  subject  also 
to  an  old  tax  ^  of  $100,  which  charge  the  purchaser  must  also 
assume.  You  will  then  purchase  the  land  not  at  $4,000,  hut 
at  $2,000. 

(a)  As  already  seen,  the  mortgage  interest  charge  of 
$100  reduces  the  selling  price  of  the  land  by  the  amount  of 
the  mortgage,  $2,000.  It  is  equally  true  that  the  tax  charge 
of  $100  reduces  it  by  the  same  amount,  $2,000;  the  mort- 
gage and  the  tax  together  therefore  reduce  it  by  $4,000;  and 
you  will  buy  the  land  at  $2,000,  the  value  of  the  equity  which 
remains  after  both  mortgage  interest  and  tax  have  been  paid. 
This  $2,000  is  the  capitalization  of  the  annual  value  of  the  lot 
to  you  after  all  charges  have  been  met. 

{h)  In  purchasing  you  will  assume  both  mortgage  interest 
and  tax  and  will  pay  them,  but  you  will  pay  them  out  of  the 
gross  income  of  $300,  and  not  out  of  the  net  income  of  $100 
from  your  investment  of  $2,000.  Therefore  no  part  of  the 
$2,000  which  you  pay  for  the  equity  will  be  taken  from  you  in 
taxation,  either  as  principal  or  interest. 

(c)  The  lot  of  land  will  thus  cost  you  for  use:  interest 
on  your  purchase  price  ($2,000  at  5  per  cent),  $100;  plus 
mortgage  interest  ($2,000  at  5  per  cent),  $100;  plus  taxes, 
$100;  and  these  together  aggregate  $300,  what  the  land  is 
worth  for  use,  the  same  as  before. 

{d)  It  follows  then  that,  under  the  present  system,  assum- 
ing free  competition,  the  selling  value  of  land  is  an  untaxed 
value,  and  landowners  who  invest  today  are  exempt  from 
taxation  —  not  indeed  upon  their  land,  but  upon  its  annual  net 
or  income  value  to  them,  or,  in  other  words,  upon  their  in- 

'By  the  term  "old  tax'*  is  intended  the  tax  in  force  at  time  of  last 
purchase;  by  "new  tax,"  one  imposed  since  last  change  of  ownership. 


142         The  Principles  of  Natural  Taxation 

vestment.  The  gross  value  is  a  taxed  value.  The  net  value 
is  an  untaxed  value. 

{e)  As  this  exemption  of  the  present  owner  holds  true 
today,  so  it  will  be  true  in  future  of  each  new  purchaser  subse- 
quently to  the  imposition  of  any  new  tax.  It  is  in  the  very 
nature  of  things  that  the  burden  of  a  land  tax  cannot  be  made 
to  survive  a  change  of  ownership. 

(/)  This  is  equally  true  of  a  bond,  but  it  is  assumed 
that  a  tax  levy  should  be  not  upon  intangible  stocks  and  bonds 
legally  conceived  as  property,  but  only  upon  tangible  goods 
and  estates.  It  is,  to  be  sure,  just  as  true  that  a  man  who 
builds  a  house  to  rent  pays  no  tax  on  his  investment,  but  for 
a  different  reason.  The  tax,  in  that  case,  is  shifted  upon  the 
user  in  increased  house  rent,  except  so  far  as,  by  discouraging 
building,  it  is  reflected  in  lower  wages  for  building.  But  an 
old  tax  upon  the  land  is  a  burden  neither  upon  present  owner 
nor  user.  The  tax  on  land  is  "  absorbed,"  that  on  the  house 
is  "shifted."^ 

(g)  We  cannot  too  soon  or  too  rigidly  fix  in  mind  the 
fact  that  this  ground  rent  of  $300  is  the  governing  factor  in 
the  situation;^  that  it  is  a  tax  laid  not  by  the  State  but  by 
nature,  which  every  man  must  pay  for  the  use  of  land,  either 
to  a  private  owner  as  rent,  or  to  the  State  as  a  tax,  or  to  both. 
No  statute  or  ordinance  can  increase  or  reduce,  exempt  from, 
or  abolish  the  payment  of  this  "economic  rent,"  or  ground 
rent,  to  somebody.  Its  amount  is  neither  fixed  nor  affected 
by  the  tax  that  is  put  upon  it,  whether  large  or  small.  Taxing 
it  catmot  increase  it;   cannot  decrease  it;   cannot  abolish  it. 

■  Landlords  who  own  and  let  both  land  and  tenement  houses,  apartment 
houses,  and  business  blocks  thereon,  escape  the  burden  of  the  tax  on  their 
land,  and  at  the  same  time  shift  upon  their  tenants  the  building  tax,  thus 
avoiding  all  share  in  the  tax  burden. 

*This  is  indeed  the  point  from  which  the  whole  discussion  proceeds. 


A  Burdenless  Tax 


143 


Its  amount  may  always  be  calculated  by  this  simple  formula: 
ground  rent  equals  interest  on  purchase  price,  plus  interest 
on  any  mortgage,  plus  taxes. 

Proposition  4. — Neither  a  tax  upon  ground  rent,  nor  the 
ground  rent  itself,  adds  anything  to  the  cost  of  land  for  use. 

(a)  Economic  rent,  ground  rent,  measures  the  value  of 
all  public,  quasi-public,  and  social  service.  If  the  whole 
ground  rent  is  not  a  burden,  but  merely  an  equivalent  for 
social  values  received,  neither  can  interest  and  taxes,  two  of 
the  parts  of  which  ground  rent  in  our  illustration  is  composed, 
be  a  burden  upon  the  user.  A  tax  upon  rent  comes  out  of 
rent,  which,  as  has  been  explained,  is  the  natural  tax  that  every 
user  has  to  pay  to  someone,  and  hence  it  subtracts  nothing  from 
wages  and  adds  nothing  to  the  cost  of  living. 

Proposition  5.  —  You  cannot  pay  $6,000  for  the  land  and 
in  addition  pay  either  the  mortgage  interest  of  $100  or  the  tax 
of  $100,  because  that  would  make  land  cost  you  $400  per 
annum  which,  by  our  assumption,  is  worth  only  $300. 

(a)  The  tax  upon  land  cannot  be  added  to  the  ground 
rent  —  which  is  kept  at  its  maximum  by  market  demand — but 
is  a  part  of,  and  must  come  out  of,  ground  rent.  If  it  could 
be  added,  that  fact  would  itself  indicate  that  the  ground  rent 
was  $400  instead  of  $300,  which  is  contrary  to  supposition. 
Land  worth  only  $300  a  year  cannot  be  made  worth  $400  a 
year  by  putting  a  tax  of  $100  upon  it. 

(b)  Let  it  not  be  forgotten  that  ground  rent,  in  the  sense 
in  which  the  word  is  used,  is  the  same  homogeneous  thing, 
one  and  indivisible,  the  world  over — what  land  is  worth  for 
use.  It  is  rent  —  or  use  value  —  not  cost  of  construction  or 
cost  of  production  —  that  fixes  the  price  of  land.  Economic 
rent  is  the  initial  and  governing  factor  from  which  all  calcula- 
tions must  proceed. 


1^         The  Principles  of  Natural  Taxation 

Second:    The  house. — 

Proposition  6.  —  The  lot  having  been  acquired,  let  it  he 
supposed  that  you  are  in  need  of  a  house,  and  that  such  a 
house  as  you  want  would  cost  to  build  $6,000,  or,  in  interest, 
$300  a  year,  the  same  as  the  annual  cost  of  the  land. 

You  will  observe  at  once  that  the  problem  of  the  house 
is  quite  different  from  that  of  the  land.  The  cost  of 
acquiring  land  depends  primarily  upon  its  rent.  Conversely, 
the  rent  of  a  house  depends  primarily  upon  its  cost.  Builders 
will  not  build  houses  unless  they  can  get  interest  on  the  cost 
of  construction.  Competition  among  builders  will  not  allow 
one  builder  normally  to  get  more  than  interest  on  cost  of 
construction. 

Proposition  7. — //  such  a  house  were  free  of  tax,  but 
mortgaged  for  $2,000,  it  would  cost  you  to  buy  only  $4,000, 
and  it  would  cost  you  to  use,  as  in  case  of  the  land,  interest  on 
purchase  price  ($4,000  at  5  per  cent),  $200,  plus  interest  on 
mortgage  ($2,000  at  5  per  cent),  $100,  making  $300  as  before. 

The  mortgage  upon  a  house,  like  that  upon  land,  will  add 
nothing  to  the  cost  of  the  house  for  use. 

Proposition  8.  — But  you  find  that  such  a  house  is  subject 
also  to  a  tax  of  $100,  which  you  will  have  to  pay  in  addition 
to  the  above  $300,  interest  on  purchase  and  mortgage,  making 
the  house  cost  you  for  use  altogether  $400,  instead  of  $300  a 
year,  or  $100  more  on  account  of  the  tax, 

(a)  Unlike  the  tax  upon  land,  the  tax  of  $100  upon  the 
house  cannot  come  out  of  the  $300  rent  (house  rent  or  in- 
terest) except  indirectly  through  its  effect  upon  wages  as 
before  mentioned,  because  house  rent  cannot  normally  be  less 
than  interest  on  the  actual  cost  of  building  the  house;  it  must 
instead  be  paid  by  the  user  of  the  house,  over  and  above  his 


A  Burdenless  Tax 


145 


interest,  making  his  house  rent,  the  annual  cost  of  his  house 
for  use,  $400  instead  of  $300. 

(b)  To  repeat :  a  house  rent,  otherwise  $300,  is  increased 
to  $400  by  a  tax  of  $100  on  the  house.  In  contrast  with  this, 
you  may  either  take  off  a  present  tax  of  $100  from  the  land, 
or  you  may  increase  that  tax  to  $200,  and  in  neither  case  will 
the  cost  of  the  land  to  the  user  be  affected.  Take  off  the  $100 
tax  from  the  house,  and  the  cost  of  the  house  to  the  user  will 
be  reduced  from  $400  to  $300  a  year;  of  land  and  house 
together,  from  $700  to  $600. 

Proposition  9.  —  The  moral  of  this  illustration  is  that  you 
get  for  use  annually  $300  worth  of  land  for  $300,  and  a  house 
costing  $300  for  $400.  In  other  words,  a  tax  upon  land  is 
a  part  of,  is  included  in,  and  comes  out  of,  ground  rent,  and 
is  no  burden  to  the  user;  while  a  tax  upon  a  house  is  a  clear 
addition  to  house  rent,  and  comes  principally  out  of  the  user 
of  the  house. 

To  recapitulate:  (a)  It  has  been  shown  that  a  house  tax 
of  $100  that  has  been  regularly  levied  takes  in  taxation  $100 
a  year  of  the  user^s  income. 

(b)  It  has  been  shown  that  a  land  tax  of  $100  takes  in 
taxation  no  part  of  the  income  of  the  user  or  present  owner, 
provided  that  he  purchased  the  land  after  the  tax  was  imposed. 

The  beauty  of  this  illustration  is  that  (in  a  classification 
which  excludes  duplication  by  certificates  or  mere  legal  evi- 
dences of  property,  like  stocks,  bonds,  etc.,  and  includes  only 
actual  tangible  property)  while  land  stands  as  always  for 
everything  except  the  products  of  labor,  a  house  is  here  made 
to  stand  as  the  representative  of  any  and  all  products  of  indi- 
vidual labor,  that  is,  for  everything  except  land,  and  the  illus- 
tration thus  becomes  all-inclusive. 

If  you  have  had  the  patience  to  follow  it  understandingly 


i 


ht- 


l46         The  Principles  of  Natural  Taxation 

you  may  rest  assured  that  you  have  mastered  a  basic  principle 
of  taxation,  and  have  solved  one  of  the  most  perplexing  prob- 
lems of  political  economy. 

It  has  been  suggested  that  this  doctrine  of  the  ultimate 
burdenlessness  of  the  land  tax  bears  the  stamp  of  truth  which 
Herbert  Spencer  affirmed  to  be  the  final  test  of  a  verity,  that 
is,  that  its  negation,  or  opposite,  is  unthinkable.  It  also  ushers 
us  into  the  perfect  repose  of  a  scientific  conclusion  that  the 
single  ta3?,  instead  of  involving  hostility  to  the  landowner, 
might  be  inaugurated  in  all  its  fulness  by  the  simple  exercise 
of  impartiality  in  taxation. 

There  is  another  mode  which,  only  give  time,  would  facilitate 
the  same  work.  It  may  be  shown  that  if  a  special  tax  be  imposed 
upon  land,  and  if  it  be  suffered  to  subsist,  it  will  in  course  of 
time  cease  to  be  felt  as  a  tax.  Land  will  be  bought  and  sold 
subject  to  it;  offers  will  be  made  and  prices  will  be  settled  with 
a  reference  to  it ;  and  each  purchaser  who  buys  for  the  purpose 
of  earning  the  average  rate  of  profit  will  reduce  the  purchase 
money,  owing  to  the  existence  of  the  tax.  If  he  does  not,  it  will 
be  because  he  prefers  something  to  profits.  Hence  the  land  tax 
imposed  in  1693  so  far  as  it  is  not  redeemed,  has  probably  ceased 

to  be   felt  as  a  tax Hence,  too,  it  follows  that  if   it 

was  originally  fair  to  impose  a  land  tax  of  4s.,  it  is  now  fair 
to  add  a  tax  of  the  same  amount;  or,  in  other  words,  if  the 
landowner  of  the  reign  of  Victoria  may  be  justly  called  upon  to 
bear  as  heavy  a  burden  as  that  borne  by  his  forefather,  the  land  tax 
must  be  raised  to  8s.,  of  which  4s.  will  be  a  rent-charge  or  the 
share  of  a  joint  tenant,  and  only  the  remainder  will  be  of  the 

nature  of  a  tax In  the  course  of  time  the  same  causes 

which  effaced  the  first  four  shillings  would  remove  the  weight 
of  the  8s.:  whenever  land  is  sold,  it  will  be  so  with  an  eye  to 
the  existence  of  the  latter  tax.  The  process  will  not  stop  here ; 
assuming  that  rents  do  not  fall,  that  land  is  freely  sold,  that  no 
equivalent  tax  is  levied  upon  personality,  and  that  the  increments 
of  taxation  are  imposed  at  very  distant  intervals,  in  the  lapse 
of  time  each  addition  to  the  land  tax  will  be  shifted  from  the 
landowners.     Thus  it  would  seem  that  there  is  no  taxing  them 


A  Burdenless  Tax 


147 


always,  unless  the  land  tax  be  repeatedly  raised,  and  that,  if 
such  an  impost  is  just  at  all,  the  State  must  in  fairness  keep 
whittling  at  the  portion  of  the  landowner  until,  at  some  distant 
period,  it  is  absorbed  by  taxation.^ 

Mr.  George  has  not  only  been  consistent  throughout  all 
his  writings  in  the  implication  of  the  ultimate  burdenlessness 
of  a  tax  on  land  values,  but  he  explicitly  declared  in  an  ad- 
dress to  the  Knights  of  Labor,  that  "  to  take  land  values  for 
public  purposes,  is  not  really  to  impose  a  tax,  but  to  take  for 
public  purposes  a  value  created  by  the  community,'*  to  which 
may  be  added  Mr.  Shearman's  testimony  that  "scientifically 
speaking,  a  tax  upon  ground  rent  is  not  a  tax  at  all." 

Professor  Seligman  at  Saratoga  in  1890  made  the  follow- 
ing statement : 

It  is  apparent  that  the  value  of  the  land  will  fall  in  exact 
proportion  to  the  increase  of  the  tax,  until  when  the  tax  equals 
the  entire  rent  the  value  of  the  land  will  be  zero.  During  these 
successive  stages,  however,  the  new  purchasers  lose  nothing.  The 
diminished  rent  will  still  yield  them  the  same  rate  of  interest  as 
before,  because  of  the  diminished  capital  value  on  which  the 
interest  is  computed. 

Professor  F.  Spencer  Baldwin,  in  an  editorial  in  the  Boston 
Transcript,  March  16,  1909,  said: 

The  broad  basis  of  this  tripos  of  the  single  tax  will  doubtless 
withstand  assaults.  Since  the  ground  rent  of  land  is  a  social 
product,  it  is  just  to  take  at  least  enough  of  it  in  taxation  to  meet 
the  expenses  of  government.  Such  a  tax,  furthermore,  cannot 
be  shifted  from  the  landowners  to  other  classes  in  the  commu- 
nity, but  must  be  paid  wholly  and  finally  by  them.  It  is,  more- 
over, just  that  they  should  be  taxed  especially  in  this  fashion; 
because  in  most  cases  they  have  bought  their  land  tax-free  under 
the  operation  of  the  principle  that  the  selling  value  of  land  is  an 
untaxed  value  and  a  land  tax  cannot  survive  a  change  of  owner- 
ship.   This  threefold  support  of  the  single  tax  is  the  stoutest 

^  Macdonell,  The  Land  Question,  p.  74. 


I 


148         The  Principles  of  Natural  Taxation 

that  has  been  erected  by  any  champion  of  the  policy.  Anyone 
who  will  take  the  pains  to  study  the  economic  principles  involved, 
and  their  application,  must  concede  the  substantial  validity  of  the 
arguments. 

The  figures  of  the  city  of  Boston  for  191 5  illustrate  the 
relative  incidence  upon  landlords  as  a  class  under  the  proposed 
system.^ 


Land   

Buildings 128,567,' 


$733,387,300  taxed  at  $18  yields    $13,200,971 

9,514,206 


000 


Real  estate  $1,261,954,300 

Personalty   304,443,000 


Poll  taxes  yield. 


$1,566,397,300 


« 


M 


t* 


« 


U 


« 


$22,715,177 

5,479,974 

$28,195,151 
420,166 


The  total  tax  levy  is  $28,615,317 

10  raise  the  same  revenue  from  land  alone  landowners  would 
have  to  pay  under  the  single  tax  on  land  $733,387,300  at 

$39.02  per  thousand $28  616  773 

They  pay  now  on  land  at  $18  per  thousand $i3i20oi97l 

Required  increase  of  the  tax  upon  land  alone;  an  increase 
which  will  become  in  the  course  of  a  generation  or  two 

as  burdenless  to  the  then  owners  as  the  present  tax  is  to    

the  owners  of  today $15,415  801 

Largely  offset  by  exemption  of  buildings,  personalty,  and  poilV,         '      ' 
as  follows: 

Buildings,  $528,567,000,  at  $18 $9,514,206 

Personal  estate  —  estimated 3,653,316 

Poll  taxes  —  estimated  *  48^000 

• $13,215,522 

Leaving  net  increase  of  tax  on  landowners  collectively $  2,200,279 

The  net  increase  ($2,200,279)  in  the  tax  bills  of  land- 
owners collectively  under  the  single  tax  is  $3  per  thousand 
(three-tenths  of  i  per  cent)  on  their  present  land  values.^ 

1  The  writer  is  indebted  to  Mr.  Jonas  M,  Miles,  a  Boston  attorney,  for 
the  above  statement. 

^  *The  landowner's  share  of  personalty  tax  is  estimated  from  examina- 
tion of  tax  lists  to  be  two-thirds  of  the  total.  In  most  towns  it  is  more 
than  that.  As  to  poll  taxes,  it  is  here  estimated  that  less  than  12  per  cent 
IS  paid  by  landowners,  though  in  most  towns  the  proportion  is  found  to 
be  larger. 


A  Burdenless  Tax 


149 


To  sum  up,  the  single  tax  would  relieve  the  poll  taxpayer, 
and  a  few  persons  who  now  pay  taxes  on  personal  estate  and 
on  nothing  else,  but  it  would  increase  the  total  now  paid  by 
the  landowners  collectively  certainly  less  than  10  per  cent, 
probably  not  more  than  5  per  cent.  The  proportions  in  which 
landowners  would  bear  the  "  burden  "  would  be  changed,  that 
is  all.  The  changes  would  be  favorable  to  those  who  have 
improved  and  made  the  best  use  of  their  land,  a  long  stride 
toward  equalization  in  taxation.  The  landowners  now  pay 
no  taxes  on  land  ^  and  all  the  single  tax  would  do  to  the  land- 
owner in  Boston  is  to  take  less  than  $3  out  of  the  privileged, 
unearned  net  income  which  he  now  enjoys  from  a  thousand 
dollars'  worth  of  land,  and  there  is  no  doubt  that  this  net 
income  averages  $35  to  $40  at  least. 

Among  other  authorities  on  the  burdenlessness  of  the  land 
tax  are  Sir  Robert  Giffen,  Essays  in  Finance,  First  Series,  p. 
242;  Mill,  Principles  of  Political  Economy,  Vol.  n.  Book  v, 
chap.  II,  sec.  6;  Bastable,  Public  Finance  (1903),  p.  440; 
Thomas  N.  Carver,  Yale  Review,  November,  1896. 

^  See  Fillebrown,  C  B.,  The  A  B  C  of  Taxation,  chap,  ni,  Doubleday, 
Page  &  Co.,  New  York,  1909. 


ill 


I!', 


0^\ 


l\ 


CHAPTER  X 

Land:  The  Rent  Concept— The  Property  Concept 

\/T  R.  GEORGE,  in  his  brief  chapter  on  " Rent  and  the 
^^^  Law  of  Rent,"  ^  often  repeats  the  agricultural  definition 
of  rent,  mostly  in  confirmation  but  sometimes  in  expansion 
of  Ricardo.  Certain  features  of  this  definition,  namely,  "the 
original  and  indestructible  properties  of  the  soil,"  "the  share 
in  the  wealth  produced  which  the  exclusive  right  to  the  use 
of  natural  capabilities  gives  to  the  owner,"  and  "the  reduc- 
tion to  individual  ownership  of  natural  elements  which  human 
exercise  can  neither  produce  nor  increase,"  which  have  been 
assigned  by  Ricardo,  George,  and  many  others  as  the  cause  of 
rent,  are  now  discarded  as  errors  by  most  economists,  if, 
indeed,  they  were  ever  held  by  them. 

THE    RENT    CONCEPT 

The  following  quotation  from  Sir  John  MacdonelP  suf- 
fuses this  economic  position  as  to  the  original  and  indestructi- 
ble properties  of  the  soil  with  a  convincing  Oriental  light: 

If  rent  be  such,  then  in  no  old  country  of  the  world  ....  is 
there  much  of  such  a  thing  as  rent,  for  the  natural  and  inherent 
properties  of  the  soil  have  long  ago  been  destroyed,  or,  if  they 
have  not  been  destroyed,  they  are  not  economically  useful.  Ex- 
cept in  the  most  rudimentary  form,  agriculture  cannot  long  sub- 

^  Progress  and  Poverty,  Book  ni,  chap.  ii. 

2/4  Survey  of  Political  Economy,  chap,  xxiv,  p.  327,  Edmonston  & 
Douglas,  Edinburgh,  1871. 

150 


Rent  and  Property  Concepts 


151 


sist  without  a  careful  renewal  of  the  properties  of  the  soil 

Why  has  Sicily,  once  the  granary  of  Rome,  with  its  meadows 
producing  unexampled  returns,  sunk  into  a  miserable  country, 
one-third  of  it  barren,  or  exporting  a  little  olive  oil?  Why  is 
Palestine,  once  a  land  flowing  with  milk  and  honey,  barren  and 
thinly  peopled,  the  veritable  antithesis  of  that  which  it  is  painted 
by  the  prophets?  Why,  to  take  a  still  more  striking  instance  of 
decadence  in  wealth,  have  the  banks  of  the  Euphrates,  which 
once  may  have  been  as  fertile  as  the  banks  of  the  Thames,  been 
transformed  into  baked  and  parched  plains?  One  agency  alone 
did  not  accomplish  all  these  changes ;  ,  .  .  .  though  conquest  and 
misgovernment  may  have  exercised  a  blighting  influence,  the 
present  barrenness  is  principally  attributable  to  the  so-called 
original  and  indestructible  properties  of  the  soil  being  peculiarly 
transient,  to  agriculture  being  long  possible  only  if  the  properties 

of  the  soil  are  perpetually  renewed The  Sicilian  at  last 

drained  the  fertility  of  his  milch  cow,  as  Michelet  calls  the  island. 
When  the  cisterns  that  crowned,  or  the  terrace  walls  that  girdled 
the  hills  of  Palestine  fell  into  ruins,  vegetation  was  parched  by 
the  heat  of  summer,  and  the  soil  swept  away  by  the  unfertilizing 
rains  of  winter.  The  canals  that  intersected  and  watered  the 
banks  of  the  Euphrates  were  suffered  to  fill  up  and  a  goodly 
region  became  "a  wilderness,  a  dry  land,  and  a  desert."  These 
are  the  consequences  of  trusting  to  "the  original  and  inde- 
structible powers  of  the  soil." 

Mr.  Shearman's  definition  was: 

Ground  rent  is  the  tribute  which  natural  laws  levy  upon  every 
occupant  of  land  as  the  market  price  of  all  the  social  as  well  as 
natural  advantages  appertaining  to  that  land,  including,  neces- 
sarily, his  just  share  of  the  cost  of  government.^ 

Is  it  not  a  little  curious  to  note  that  a  law  of  rent  plainly 
stated  by  Anderson,  West,  Malthus,  and  Ricardo  nearly  a 
century  and  a  half  ago  should  continue  to  be  defined  in  the 
agricultural  terms  of  no  rent  land,  rather  than  in  the  urb^n 
terms  of  manufacture  and  commerce.     Perhaps  not  even  all 

^Natural  Taxation,  p.  116. 


ill 


( 


h 


i 


■j     ■ 


152        The  Principles  of  Natural  Taxation 

economists  realize  how  modem  a  matter  is  the  cumulative 
growth  of  urban  rent,  which  increases  almost  in  geometric 
ratio.  It  would  seem  as  though  the  classical  economists  were 
more  excusable  than  their  successors  in  overlooking  the  im- 
portance of  this  factor.  Would  it  not  be  an  improvement  to 
let  the  definition  stand  naturally  and  squarely  like  a  pyramid 
upon  the  ever  broadening  base  of  urban  rent,  rather  than  try 
to  balance  it  upon  its  toppling  apex,  as  it  were,  of  agricultural 
rent? 

The  general  economic  conception  of  the  land  tax  is  largely 
a  compound  one,  to  wit,  that  it  is  on  the  one  hand  a  tax  on 
the  fertility  value  of  agricultural  land,  and  on  the  other,  a  tax 
on  the  site  value  of  urban  land.  It  would  seem  to  need  no 
argument  to  show  a  great  simplification  for  both  teacher  and 
learner  if  "site"  might  here  be  substituted  for  "fertility," 
making  a  rent-tax  applicable  to  the  single  attribute  of  site 
value  only. 

The  following  conclusion  is  presented  for  consideration: 
On  the  surface  of  the  globe  are  countless  varieties  of  ex- 
haustible fertility,  i.e.,  chemical  constituency,  differing  in  kind 
and  combination  from  the  nitrogen,  hydrogen,  oxygen,  and 
carbon  of  the  soil  to  the  carbon  of  the  coal  and  the  diamond. 
Fertility  as  an  attribute  need  not  be  predicated  of  agricultural 
land  alone.  Economic  fertility  belongs  equally  to  any  other 
land  which  yields  to  labor  its  product  whether  in  food,  min- 
eral, or  metal.  Land  may  be  fertile  in  wheat,  corn,  and  po- 
tatoes. It  may  be  fertile  in  cotton,  in  tobacco,  or  in  rice.  It 
may  be  fertile  in  diamonds,  in  gold,  silver,  copper,  lead,  or 
iron.  It  may  be  fertile  in  oil,  coal,  or  natural  gas,  in  water 
power  or  water  front.  The  value  of  artificial  fertility  is  an 
improvement  value.  The  value  of  natural  fertility  of  any  kind 
is  a  site  value. 


Rent  and  Property  Concepts 


153 


Henry  George  said : 


Rent  or  land  value  does  not  arise  from  the  productiveness  or 
utility  of  land.  It  in  no  wise  represents  any  help  or  advantage 
given  to  production,  but  simply  the  power  of  securing  a  part  of 
the  resuhs  of  production.  No  matter  what  are  its  capabilities, 
land  can  yield  no  rent  and  have  no  value  until  some  one  is  willing 
to  give  labor  or  the  results  of  labor  for  the  privilege  of  using  it ; 
and  what  anyone  will  thus  give  depends  not  upon  the  capacity 
of  the  land,  but  upon  its  capacity  as  compared  with  that  of  land 
that  can  be  had  for  nothing.  I  may  have  very  rich  land,  but  it 
will  yield  no  rent  and  have  no  value  so  long  as  there  is  other 
land  as  good  to  be  had  without  cost.  But  when  thi§  other  land 
is  appropriated,  and  the  best  land  to  be  had  for  nothing  is  inferior, 
either  in  fertility,  situation,  or  other  quality,  my  land  will  begin 
to  have  a  value  and  yield  rent.  And  though  the  productiveness 
of  my  land  may  decrease,  yet  if  the  productiveness  of  the  land 
to  be  had  without  charge  decreases  in  greater  proportion,  the 
rent  I  can  get,  and  consequently  the  value  of  my  land,  will  steadily 
increase.  Rent,  in  short,  is  the  price  of  monopoly,  arising  from 
the  reduction  to  individual  ownership  of  natural  elements  which 
human  exertion  can  neither  produce  nor  increase.^ 

That  natural  fertility  is  a  source  of  rent  has  become  almost 
axiomatic,  so  deeply  is  the  thought  imbedded  in  the  economic, 
as  well  as  in  the  popular  mind;  but  the  later  tendency  is  to 
question  the  accuracy  of  this  view  and  to  subject  it  afresh  to 
a  searching  and  logical  analysis. 

In  the  light  of  such  analysis  it  seems  clear  that  it  is  only 
location  or  site  that  gives  fertility  any  value  it  may  possess. 
In  many  places,  soil  of  any  kind  (fertile  or  barren)  is  of  no 
value.  It  is  only  when  soil  is  located  in  the  right  place,  i.e., 
when  there  are  people  about  to  use  it,  that  it  becomes  valu- 
able. Fertile  soil  in  one  place  is  less  valuable  than  barren  soil 
in  another.  A  gravel-bank  situated  within  city  limits  may  be 
much  more  valuable  than  soil  suitable  for  market-gardening. 

'  Progress  and  Poverty,  p.  i66. 


I 


m 


I   * 


154         The  Principles  of  Natural  Taxation 

The  problem,  in  each  case,  is  not  one  of  comparative  or  dif- 
ferential value.  It  is  a  problem  of  positive  or  independent 
value,  of  which  proximity  appears  to  be  the  sole  cause.  Nat- 
ural fertility  is  the  constant  factor  in  any  comparison;  that 
is  to  say,  whatever  element  of  natural  fertility  is  present  in 
the  land  today  has  been  there  from  creation,  but  the  element 
of  proximity  is  the  differential  factor  that  changes  with  the 
advance  of  civilization.  Instead  of  fertility  giving  value  to 
site,  is  not  the  truth  to  be  found  in  the  very  reverse  statement 
that  it  is  site  that  gives  value  to  fertility? 

The  following  is  submitted,  not  as  a  "consensus"  but  in 
perfect  confidence  that  there  is  no  other  ground  upon  which 
the  economic  foot  can  finally  rest  and  be  at  peace. 

If,  as  economists,  we  postulate  land  and  man  as  the  two 
primary  contributors  to  production,  then  we  are  compelled  to 
assume  fertility  as  a  necessary  and  presupposed  quality  in  land, 
without  which  land  would  not  be  land;  just  as  when  we 
speak  of  man  we  assume  intelligence,  without  which  that  un- 
feathered  biped  would  not  be  man.  The  first  factor,  land, 
has  been  the  passive  factor — what  Emerson  called  "the  raw 
bullion  of  nature" — present  from  the  foundation  of  the 
world,  not  a  square  foot  having  any  value  until  the  advent 
of  the  active  factor,  man.  Varying  fertility  is  an  attribute, 
a  part  of  land  itself;  as  varying  intelligence  is  an  attribute, 
a  part  of  man  himself.  In  short,  in  economic  thought  land 
is  fertility  and  man  is  intelligence.  That  the  fertility  in  the 
one  case,  and  the  intelligence  in  the  other,  are  unequally  dis- 
tributed does  not  affect  the  contention  that  it  is  only  when 
the  intelligence  approaches  the  fertility  that  the  value  of  the 
latter  comes  into  existence. 

This  issue  is  pressed  upon  the  reader  in  the  conviction  that 
it  is  not  merely  an  academic  one,  but  is  charged  with  deep 


Rent  and  Property  Concepts 


155 


scientific  consequence.  It  affects  the  very  foundations  of  a 
theory  of  natural  taxation.  The  claim  if  substantiated  that 
ground  rent  is  a  social  product  leaves  no  room  for  the  hy- 
pothesis that  any  part  of  land  value  is  due  to  natural  fertility. 

Perhaps  the  shortest  definition  of  economic  rent  yet  sug- 
gested is  one  already  quoted  and  that  is  applicable  equally  to 
agricultural  and  to  urban  land,  one  approved  by  the  decision 
of  one  hundred  and  thirty-five  economist  judges  without  a 
dissenting  opinion.  The  definition  is:  ground  rent  is  what 
land  is  worth  for  use. 

THE  PROPERTY  CONCEPT.  One  of  the  serious  maladjust- 
ments of  the  situation  today  is  the  conflicting  opinions  as  to 
Mr.  George's  views  upon  the  question  of  private  property  in 
land,  these  having  operated  as  a  serious  impediment  to  the 
progress  of  the  single  tax.  Believing  that  this  is  the  proper 
place  and  time,  I  submit  the  conclusion  at  which  I  have 
arrived. 

In  chapter  after  chapter  of  Progress  and  Poverty,  as  well 
as  thirteen  years  later  in  A  Perplexed  Philosopher,  Henry 
George  reiterates  his  own  and  Spencer's  error  (which  both 
had  recanted),  viz.,  that  private  property  in  land  is  unjust 
and  should  be  abolished. 

Notwithstanding  his  apparent  contradiction  of  expression, 
it  is  manifestly  due  to  Mr.  George's  intellectual  honesty  to 
credit  him  with  the  same  clear  conception  with  which  he  in 
turn  credited  Spencer  when  he  summarized  in  A  Perplexed 
Philosopher  the  latter's  Social  Statics  chapter,  viz.,  "  Private 
property  in  land,  as  at  present  existing,  can  show  no  original 
title  valid  in  justice,"  etc. 

In  assuming  to  suggest  to  students  of  Henry  George,  per- 
haps at  a  critical  period  in  his  change  of  base  from  an  old 
dispensation  to  a  new,  what  seems  to  me  a  rational  interpreta- 


V 


156        The  Principles  of  Natural  Taxation 

tion  of  his  language,  it  is  ventured  to  paraphrase  the  form  of 
argument  used  by  himself  in  A  Perplexed  Philosopher,  chap. 
II,  entitled  "  An  Incongruous  Passage."  Here  he  interpolates 
into  the  lines  of  Herbert  Spencer  what  he  believed  to  be  their 
intended  meaning.  A  few  moments  of  careful  attention  may 
be  time  well  spent. 

In  connection  with  his  own  misinterpretation  of  Spencer*s 
passage  regarding  compensation  to  existing  proprietors,  he 
says: 

Taken  by  itself,  this  passage  seems  to  admit  that  existing 
landowners  should  be  compensated  for  the  land  they  hold  when- 
ever society  shall  resume  land  for  the  benefit  of  all.  Though 
this  is  diametrically  opposed  to  all  that  has  gone  before  and  all 
that  follows  after,  it  is  the  sense  in  which  it  has  been  generally 
understood. 

This  recommendation  of  Mr.  George's  that  Spencer's  spe- 
cific views  on  one  plank  of  his  platform  should  be  interpreted 
in  the  light  of  his  generally  known  attitude  on  all  other  planks, 
suggests  a  close  parallel  between  the  treatment  which  he  ac- 
cords to  Spencer  and  the  treatment  which  he,  by  inference, 
would  have  accorded  to  himself. 

By  a  similar  process  of  interpolation  Henry  George,  in 
turn,  may  be  made  to  appear  as  his  own  interpreter.  For 
instance,  in  Progress  and  Poverty,  Book  vii,  chap,  i,  "The 
Injustice  of  Private  Property  in  Land,"  Mr.  George  would 
have  said:  "If  private  property  in  [the  economic  rent  of] 
land  be  just,  then  is  the  remedy  I  propose  a  false  one;  if,  on 
the  contrary,  private  property  in  [the  economic  rent  of]  land 
be  unjust,  then  is  this  remedy  the  true  one."  Also  on  p.  336 : 
"  Whatever  may  be  said  for  the  institution  of  private  property 
in  land  [as  it  exists  today],  it  is  therefore  plain  that  it  cannot 
be  defended  on  the  score  of  justice."    Linking  the  above  ex- 


"Rent  and  Property  Concepts 


157 


pository  innovation  to  Book  viii,  chap.  11,  we  find  the  follow- 
ing illuminating  lines  (p.  402) : 

I  do  not  propose  either  to  purchase  or  to  confiscate  private 

property  in  land It  is  not  necessary  to  confiscate  land; 

it  is  only  necessary  to  confiscate  rent By  leaving  to  land- 
owners a  percentage  of  rent  which  would  probably  be  much  less 
than  the  cost  and  loss  involved  in  attempting  to  rent  lands 
through  state  agency,  and  by  making  use  of  this  existing  machin- 
ery, we  may,  without  jar  or  shock,  assert  the  common  right  to 

[the  site  value  of]  land  by  taking  rent  for  public  uses 

What  I  therefore  propose,  as  the  simple  yet  sovereign  remedy, 
.  .  .  .  is  —  to  appropriate  rent  by  taxation. 

Thus  was  to  be  accomplished  the  object  of  his  heart's 
desire  —  security  of  improvements  without  disturbance  of  land 
titles. 

The  broad  basis,  keynote,  and  inspiration  of  Progress  and 
Poverty  Mr.  George  found  in  the  doctrine  of  natural  rights-— 
the  equal  right  of  all  men  to  land.  Taking  for  his  main 
premise  the  right  of  all  men  to  the  soil  in  its  original  state, 
he  deduced  from  this  premise  the  right  of  all  men  to  economic 
rent.  The  soundness  of  this  deduction  has  been  in  these  latter 
days  seriously  questioned. 

In  proof  of  the  wrongfulness  of  private  property  in  land, 
as  it  lies  in  the  private  appropriation  of  ground  rent,  he  puts 
forward  the  doctrine  of  natural  rights  to  land  as  the  premise 
and  basis  for  the  joint  right  to  rent,  a  form  of  proposition 
which  he  and  most  of  his  predecessors  in  land  reform  accepted 
as  axiomatic,  viz.,  the  equal  right  of  all  men  to  the  soil  in  its 
original  state,  from  which  he  deduced  the  equal  right  of  all 
men  to  the  rent  of  land.  Since,  as  Mr.  George  himself  has 
said,  "  the  primary  error  of  the  advocates  of  land  nationaliza- 
tion is  in  their  confusion  of  equal  rights  with  joint  rights. 
....  In  truth  the  right  to  the  use  of  land  is  not  a  joint  or 


fi 


\.i 


\i 


158         The  Principles  of  Natural  Taxation 

common  right,  but  an  equal  right;  the  joint  or  common  right 
is  to  rent,  in  the  economic  sense  of  the  temU,"  ^  this  whole  line 
of  argument  from  natural  rights  is  unnecessary. 

In  the  light  of  the  foregoing  question  whether  or  not  Mr. 
George  meant  to  assert  that  the  taking  of  any  part  or  all  of 
ground  rent  in  taxation  would  destroy  individual  ownership 
in  severalty  of  the  land  itself  does  not  appear  to  be  debatable. 
In  any  ev^ent,  his  assertion  cannot  make  a  right  out  of  a  wrong. 
None  of  his  confreres  in  the  company  assembled  in  this  volume 
advanced  such  a  proposition.  Smith,  Mill,  Dove  gave  no  hint 
akin  to  it.  Burgess,  Macdonell,  McGlynn,  Shearman  made  it 
no  part  of  their  proposed  system ;  indeed  no  economist  can  be 
recalled  who  has  hazarded  this  view,  thus  leaving  such  a  posi- 
tion unique  by  Mr.  George's  sole  occupancy.  This  fact  makes 
us  the  more  strenuous  for  an  interpretation  that  shall  har- 
monize with  his  generally  accepted  tenets. 

In  1872,  he  wrote  in  Our  Land  and  Land  Policy: 

It  by  no  means  follows  that  there  should  be  no  such  thing 
as  property  in  land,  but  merely  that  there  should  be  no  monopo- 
lization—  no  standing  between  the  man  who  is  willing  to  work 
and  the  field  which  nature  offers  for  his  labor.  For  while  it  is 
true  that  the  land  of  a  country  is  the  free  gift  of  the  Creator  to 
all  the  people  of  that  country,  to  the  enjoyment  of  which  each 
has  an  equal  natural  right,  it  is  also  true  that  the  recognition  of 
private  ownership  of  land  is  necessary  to  its  proper  use  —  is,  in 
fact,  a  condition  of  civilization. 

The  ethical  justification  of  the  single  tax  can  be  derived 
much  more  simply.  A  careful  study  of  the  nature  of  economic 
rent  will  show  that  it  arises  from  the  growth  and  efforts  of 
the  community  and  not  from  the  labor  of  the  landowner.  The 
taking  of  rent  by  the  community  can  therefore  be  put  on  the 

1 A  Perplexed  Philosopher,  chap,  xi,  p.  242. 


Rent  and  Property  Concepts 


159 


simple  basis  that  property  rights  in  any  commodity  should  be 
vested  in  the  person  or  persons  who  produced  that  commodity. 
Indeed  it  is  somewhat  curious  that  after  devoting  so  much 
space  to  the  argument  based  on  natural  rights  to  the  land, 
Henry  George  himself  finally  rested  his  case  on  this  very  line 
of  reasoning.  At  the  end  of  his  chapter  on  the  "  Canons  of 
Taxation"  he  says  that — 

a  tax  upon  land  values  is  the  taking  by  the  community,  for  the 
use  of  the  community,  of  that  value  which  is  the  creation  of 
the  community.  It  is  the  application  of  the  common  property  to 
common  uses.  When  all  rent  is  taken  by  taxation  for  the  needs 
of  the  community,  then  will  the  equality  ordained  by  nature  be 
attained.  No  citizen  will  have  an  advantage  over  any  other  citizen 
save  as  is  given  by  his  industry,  skill,  and  intelligence ;  and  each 
will  obtain  what  he  fairly  earns.  Then,  but  not  till  then,  will 
labor  get  its  full  reward  and  capital  its  natural  return.^ 

What  better  can  Henry  George's  followers  do  than  to 
make  his  ultimate  their  own?  Here  is  a  flat  contradiction  to 
whatever  error  is  in  the  "equal  rights'*  argument  and  the 
"common  property  in  land"  argument.  The  above  is,  as  it 
were,  a  repealing  clause.  Is  it  not  as  though  he  had  said, 
whatever  acts  or  parts  of  acts  of  mine  either  before  or  since 
are  in  conflict  with  this  act  are  hereby  repealed  ? 

A  score  of  years  ago  it  was  my  privilege,  under  criticism, 
to  make  public  the  avowal  that  in  the  long  run  I  would  prove 
myself  Henry  George's  most  friendly  critic  and  vindicator. 
Thus  I  have  frequently  found  myself  standing  between  him 
and  many  false  and  harmful  impressions  that  have  operated 
to  his  prejudice  and  to  that  of  his  cherished  reform.  Among 
these,  the  insistence  upon  a  full  100  per  cent  rate,  and  the 
abolition  of  private  property  in  land  as  Henry  George's  stand- 

'  The  italics  are  the  author's. 


i; 


i 


"  t-    ' 


160         The  Principles  of  Natural  Taxation 

ard  measures  for  sound  doctrine,  have  been  painfully  wasteful 
and  enervating,  besides  being  a  standard  upon  which  neither 
Canada  nor  Australia  nor  Germany,  nor  indeed  any  other 
country  except  the  United  States,  has  laid  misleading  emphasis. 
Henry  George  himself  was  a  persuasive  writer  and  speaker, 
little  given  to  denunciation.  The  followers  of  his  teachings 
who  have  done  him  greatest  honor  have  been  those  who  have 
talked  over  his  principles  at  their  own  hearthstones  and  in 
their  own  council  chambers,  and  voted  for  them  at  their  own 
hustings,  rather  than  those  who  by  militant  intrusion  into 
foreign  bailiwicks  have  aroused  and  fostered  a  wholly  gratu- 
itous prejudice. 

If  those  devout  followers  of  Henry  George  who  still  insist 
that  he  should  go  down  to  posterity  as  advocating  the  destruc- 
tion of  private  property  in  land  would  exercise  his  care  to 
avoid  misinterpretation,  they  would  thereby  better  serve  him 
and  the  reform  he  so  wonderfully  expounded. 


CHAPTER  XI 
Taxation  and  Housing:  The  Taxation  of  Privilege^ 

THE  housing  problem  is  one  aspect  of  the  problem  of  the 
distribution  of  wealth.  Howsoever  deep  the  motive 
which  impels  the  housing  movement,  its  success  can  be  achieved 
only  through  the  operation  of  cold  unfeeling  economic  law 
which  shall  govern  and  effect  a  more  just  distribution  of 
wealth.  Only  by  its  aid  can  capital,  through  improved  plan- 
ning and  reduced  cost  of  building,  bring  suitable  housing 
within  reach  of  labor's  ability  to  pay. 

The  solution  of  the  housing  problem  is  bound  up  with  the 
conciliation  of  labor  in  its  alleged  conflict  with  capital,  a  con- 
dition which  cannot  come  about  until  the  distribution  of  cur- 
rent wealth  shall  be  between  the  two  factors  labor  and  capital, 
per  se,  instead  of  as  now  between  these  and  a  third  factor, 
privilege,  that  is,  capital  allied  with  monopoly.  In  this  way 
only  can  the  fangs  of  privilege  be  drawn.  Capital  of  itself 
has  no  fangs. 

The  burden  of  our  contention  is  that  privilege  is  the  bane 
of  the  social  situation,  and  that  its  abatement  and  gradual 
abolition  should  be  sought.  In  proportion  as  the  perquisites 
of  privilege  are  transferred  to  the  wage  fund,  in  that  propor- 
tion will  the  housing  perplexity  cease  to  perplex,  and  there  is 
no  point  upon  which  it  is  more  important  that  the  public  mind 
should  be  clear  than  upon  this. 

1  Paper  read  at  the  Fourth  National  Conference  on  Housing  in  Amer- 
ica, at  Minneapolis,  Minnesota,  October  7,  1915. 

161 


162         The  Principles  of  Natural  Taxation 

The  Century  Dictionary  defines  privilege  as  "  a  special  and 
exclusive  power  conferred  by  law  on  particular  persons,  or 
classes  of  persons,  and  ordinarily  in  derogation  of  the  common 
right."  The  popular  conception  of  privilege  is  that  it  is  the 
law-given  power  of  one  man  to  profit  at  another  man's  ex- 
pense.^ 

The  principal  form  of  privilege  is  the  appropriation  by 
individuals  or  by  public  service  corporations,  without  ade- 
quate payment  therefor,  of  all  or  a  large  share  of  the  economic 
rent  of  land,  which  rent  is  created  by  the  growth,  activity,  and 
expenditures  of  the  community.  After  this  major  privilege 
come  the  minor  ones  connected  with  patents,  tariff,  and  the 
issue  of  currency. 

"But,"  you  will  ask,  "how  can  the  treatment  of  privilege 
contribute  to  the  solution  of  the  housing  problem?"  And  we 
answer,  "By  the  gradual  abatement  or  abolition  of  privilege 
through  taxation."  A  tax  upon  privilege  has  everything  in 
its  favor,  since  it  is  conceded  that  such  a  tax  can  never  be  a 
burden  upon  industry,  nor  can  it  ever  operate  to  reduce  the 
wages  of  labor  or  increase  prices  to  the  consumer. 

The  immediate  tendency  of  the  taxation  of  privilege  would 
be  to  transfer  to  wages  that  portion  of  the  current  wealth 
which  now  flows  to  privilege.  In  other  words,  it  would  widen 
and  deepen  the  channel  of  wages  by  enlarging  opportunities 
for  labor,  while  increasing  the  purchasing  power  of  nominal 
wages  through  reduction  of  prices.  On  the  other  hand,  it 
would  abate  privilege  by  requiring  the  man  who  has  a  privi- 
lege to  pay  for  it,  the  fair  inference  being  that  so  far  as 
privilege  is  paid  for,  it  ceases  to  be  a  privilege.  A  better- 
ment of  wage  necessarily  follows  the  taxation  of  privilege. 
An  estimate  of  50  per  cent  would  be  a  conservative  one  of 
^TheABC  of  Taxation,  p.  14& 


Taxation  and  Housing 


163 


the  betterment  to   wages   which  might  be   secured   in   this 
way. 

The  main  approach  to  a  fair  distribution  of  wealth  lies 
along  the  line  of  fair  wages  and  fair  prices.  But  what  are 
fair  wages  and  fair  prices  ?  Practically  and  substantially  fair 
prices  are  prices  unenhanced  by  privilege,  and  fair  wages  are 
wages  undiminished  by  taxation.  Under  such  a  regime  wealth 
that  now  goes  to  privilege  will  be  gradually  diverted  to  the 
wage  fund  so  that  eventually  instead  of  the  two  channels  of 
distribution,  wages  (counting  interest  as  the  wages  of  capital 
per  se)  and  privilege,  current  wealth,  that  is  wealth  as  it  is 
created,  will  finally  flow  into  the  one  channel  of  wages  — 
wages  of  capital,  of  hand,  and  of  brain. 

Above  and  beyond  the  value  of  franchise  privilege,  which 
in  a  final  analysis  is  itself  a  land  value,  there  is  one  thing,  viz., 
the  private  appropriation  of  the  net  rent  of  land  (total  ground- 
rent  less  taxes)  which  constitutes  the  bulk  of  all  privilege  and 
which  is  of  gigantic  proportions.  Various  careful  estimates 
agree  that  out  of  the  total  wealth  of  the  United  States  much 
more  than  fifty  billions  of  values  are  socially  created  but  pri- 
vately appropriated.  On  a  5  per  cent  basis  this  would  amount 
annually  to  $25  per  capita,  or  an  average  of  $125  per  family 
of  five,  which  of  itself  explains  the  constant  increase  in  the 
cost  of  living.  In  large  cities  where  reliable  statistics  are 
available,  these  figures  run  far  higher.  The  people  of  the 
city  of  Boston  pay  for  the  use  of  Boston  land  more  than  fifty 
million^  dollars  annually.  The  city  now  takes  of  this  amount 
more  than  ten  millions  in  taxation,  leaving  about  forty  millions 
net  rent  to  be  privately  appropriated,  every  dollar  of  which 
represents  labor  value.  This  would  amount  to  say  $60  per 
capita,  or  the  very  considerable  sum  of  $300  per  family  of  five. 
^  The  A  B  C  of  Taxation,  p.  18. 


m 


IW         The  Principles  of  Natural  Taxation 

So  much  for  the  thing  to  be  done,  but  how  about  a  modus 
operandi? 

Not  only  have  presidents  spoken  and  written  freely  on  the 
abridgment  of  privilege,  but  many  proposed  government  meas- 
ures have  been  aimed  at  its  accomplishment.  Without  invad- 
ing the  field  of  politics,  we  may  note  that  republican  Wall 
Street  and  democratic  Tammany,  the  chief  exponents  of  non- 
partisan privilege,  were  simply  evicted  from  the  Baltimore 
Convention,  and  many  administrative  achievements  so  far  have 
been  in  keeping  with  that  initial  action. 

Congressional  Trust  bills  have  sought  not  to  curb  business 
but  to  curb  privilege.  The  fall  of  New  York,  New  Haven  & 
Hartford  from  279  to  43  in  the  Wall  Streets  of  the  country 
means  little  to  the  traffic  or  the  travel  of  the  people  who  use 
the  road.  The  railroad  still  remains  and  its  legitimate  busi- 
ness remains.  It  does  mean  everything  to  the  stock  market, 
the  dealers  in  privilege,  to  speculators  in  and  forestallers  of 
labor  and  skill  and  brains.  Administrators  keep  right  on 
"  running  the  road,"  however  many  the  millions  that  may  have 
been  filched  from  widows  and  orphans,  or  however  many  ma- 
nipulators of  privilege,  posers  as  benevolent  patrons  of  enter- 
prise, may  go  to  the  wall.  Every  curb  to  privilege  means 
relief  to  labor  from  payment  of  dividends  on  water.  Every 
abridgment  of  privilege  means  just  so  much  carried  to  the 
credit  side  of  the  wage  account,  and  this  it  is  that  has  imme- 
diately to  do  with  the  housing  problem. 

The  record  of  the  national  administration  so  far  affords 
striking  indorsement  of  the  Jeffersonian  principle  of  "equal 
opportunities  for  all,  special  privileges  to  none.*'  This  is  what 
states  and  statesmen  ought  to  mean  by  "equality  before  the 
law."  Without  this,  "equality  before  the  law"  is  a  juggling 
phrase.    Only  so  far  as  privilege  is  expunged  from  the  statute 


Taxation  and  Housing 


165 


can  there  be  any  approach  to  our  vaunted  "equality  before 
the  law." 

People  are  awakening  to  the  fact  that  for  enormity  of 
proportions,  for  unconscious,  unintentional  but  aggravating 
injustice,  the  private  appropriation  of  ground  rent  is  more 
devastating  than  all  other  privileges  put  together,  and  is 
"  against  public  policy."  Think  for  a  moment  what  have  been 
the  extensions,  accelerated  exploitations,  ramifications,  and  en- 
croachments of  privilege  in  the  brief  period  of  fifty  years ;  how 
it  has  battened  upon  the  fruits  of  labor  which  ought  in  justice 
to  have  gone  to  the  nourishment  of  labor.  What  is  needed 
is  a  distinct  change  of  tendency.  Agitation  in  this  direction 
has  been  under  way  for  some  years,  and  during  the  twelve 
months  past  it  has  penetrated  or  inoculated  almost  every  busi- 
ness field,  up  to  the  dead  line  at  which  every  reform  halts,  viz., 
the  land,  which  seems  to  be  the  sacred  stopping-place  in  the 
advance  upon  every  social  enemy.  The  significance  of  this 
fact  appears  to  have  escaped  the  attention  even  of  non-privi- 
lege presidents.  When  people  outgrow  the  pagan  fetich  that 
the  rent  of  land  should  go  to  the  few  instead  of  to  all,  when 
they  realize  that,  taking  Boston  for  an  example,  the  worship 
of  this  fetich  costs  its  people  annually  not  less  than  $300  or 
$400  per  family — five  or  ten  times  more  than  the  worship 
of  the  true  God — then  monopoly's  line  of  battle  will  vanish 
like  the  morning  dew. 

Under  the  tax  laws  of  today  every  Boston  man  as  occupier 
bears  an  equal  yearly  tax  burden  on  the  house  he  lives  in  at 
the  rate  of  $18  per  thousand.  Why  should  not  the  owner  of 
Boston's  land  bear  the  same  tax  burden  at  the  same  rate  of 
$18  per  thousand  upon  his  investment  now  confessedly  free 
of  the  burden,  thus  putting  the  house  man  and  the  land  man 
on  the  same  basis,  that  is  to  say,  proportionately  reducing  the 


166         The  Principles  of  Natural  Taxation 

income  of  each?  To  the  above  extent  taxation  may  be  applied 
for  the  solution  of  your  housing  problem  at  once,  and  without 
a  shadow  of  injustice  to  the  landowner.  Such  impartial  rate 
on  house-owner  and  landowner,  of  which  a  generation  of 
even  limited  foresight  might  easily  have  given  us  today  full 
realization,  would  mean  twelve  million  dollars  more  of  eco- 
nomic rent  (or  say  $80  per  family)  to  the  good  of  the  people 
of  Boston.  Fifteen  or  twenty  years  would  be  ample  for  the 
gradual  accomplishment  of  the  rectification  of  things,  and  land- 
owners, especially  considering  the  exemption  of  their  improve- 
ments, would  scarcely  be  aware  of  the  change. 

Let  it  be  borne  in  mind  that  we  have  been  speaking  of  the 
ultimate  possibilities  of  the  taxation  of  economic  rent,  "the 
taking  by  the  community  for  the  use  of  the  community  of 
that  which  is  the  creation  of  the  community."     It  is  claimed 
for  this  process  that  it  will  gradually  effect  the  lockout  of 
privilege  while  unlocking  to  labor  the  doors  of  opportunity. 
Reflect  for  a  moment  upon  what  it  would  mean  to  labor  if 
Boston  should  make  an  intelligent  and  earnest  start  to  renew 
the  imperfect  housing  even  of  its  business,  to  say  nothing  of 
its  people.    We  are  trying  to  present  to  your  prophetic  eye  the 
final  beneficent  results  which  a  just  tax  system  can  be  trusted 
to  work  out  without  any  overturn  to  person  or  institution  or 
society.    No  sudden  shock  is  contemplated,  but  rather  respect 
for  the  feelings  of  the  landowners,  from  whom  as  a  class  a 
full  share  of  help  may  be  counted  upon.     This  general  plan, 
if  adopted,  will,  it  is  believed,  directly  set  in  motion  two  tend- 
encies: (i)  the  reduction  of  harmful  monopoly  to  a  point  of 
innocuous  "privilege,"  (2)  the  enlargement  of  the  wage  fund 
to  a  point  of  fair  proportional  distribution.     Just  at  what 
point  these  opposing  tendencies  will  meet  in  stable  equilibrium 
only  time  can  tell.    The  vital  thing  is  to  lose  no  time  in  begin- 


Taxation  and  Housing 


167 


ning.  There  is  no  reasonable  excuse  why  a  start  should  not 
be  made  directly  in  this  year  19 16.  A  generation  ought  to 
work  wonders.  We  are  sometimes  met,  however,  by  the  sober 
question,  "Where  is  the  housing  capital  to  come  from?" 
Naturally  it  should  come  out  of  a  superabundance  of  its  own 
by  which  it  would  be  self -constrained  to  broaden  and  extend 
its  field  of  investment  to  include  the  humblest  of  housing.  As 
fast  and  as  far  as  capital's  field  of  investment  is  narrowed 
through  the  restraint  of  privilege,  just  so  far  will  it  have  to 
find  a  way,  or,  what  is  more  in  keeping  with  its  responsibilities, 
make  a  way  to  occupy  itself  in  the  very  necessary  dividend- 
paying  but  now  neglected  work  of  housing  the  millions,  the 
easy  accomplishment  of  a  generation  or  two.  We  may  con- 
fidently look  to  a  new  incidence  of  taxation  to  enable  the  mil- 
lions to  pay  the  actual  ground  rent  of  the  land  and  interest  on 
their  houses.  Today  they  are  not  able  to  bear  monopoly 
charges  and  needless  taxes  upon  houses. 

The  habits  and  limitations  of  capital  are  patent  even  to  the 
casual  observer.  Its  first  preference  is  for  land  speculation, 
including  natural  resources,  franchises  that  are  addicted  to 
extra  dividends,  and  the  watering  of  stocks.  Already  an  ole- 
aginous hand  of  the  capital  octopus  is  plainly  apparent  in 
business  consolidations.  The  first  direct  attention  of  capital 
to  the  housing  problem  is  of  comparatively  recent  date  and 
has  resulted,  in  Boston,  in  the  seemingly  complete  solution  of 
the  problem  of  "  office  "  housing — in  a  complete  hegira  of  ten- 
ants from  chambers  and  garrets  that  were  out  of  date  even 
in  ante-bellum  days,  to  quarters  of  perfect  modern  comfort 
and  utility.  But  at  this  stage  capital  seems  to  have  halted  for 
rest  and  refreshment.  Here,  again,  Boston  has  a  ready  ex- 
planation in  that  office  buildings  offer  a  tempting  rent  roll  at 
comparatively  small  land  investment. 


168         The  Principles  of  Natural  Taxation 

Up  to  now,  capital,  it  may  be  said,  has  had  little  to  do  in 
the  way  of  looking  around  for  jobs.  Individuals  have  had 
to  do  the  searching.  When  the  New  York,  New  Haven  & 
Hartford  Railroad  and  many  other  wide-open  doors  to  big 
investments  and  big  profits  begin  to  shut  by  legislative  com- 
press, then  capital,  by  pressure  of  its  own  accumulation,  may, 
after  the  housing  of  general  business,  turn  to  the  humbler  em- 
ployment of  the  housing  of  its  artisans  and  laborers.  The 
increased  taxation  of  land  will  operate  as  a  double  incentive. 
It  will  invite  capital  to  a  sound  investment  at  a  fair  rate  of 
interest;  it  will  also  constrain  it  to  make  improvements  in 
order  to  secure  income  from  the  land  out  of  which  to  pay  the 
land  taxes. 

The  housing  of  Boston's  general  business,  which  requires 
comparatively  less  capital  but  still  more  brains,  is  just  now 
beginning  to  receive  attention.  Chicago  has  one  model  de- 
partment store,  Marshall  Field's,  model  because  it  has  room. 
There  are  but  few  notable  model  department  stores  in  the 
cities  of  the  United  States  because  room  cannot  be  had  except 
at  exaction  prices  in  dealing  with  one  or  twenty  estates.  Nine- 
tenths  of  Boston's  mercantile  business  is  still  literally  fighting 
for  room  to  expand. ^  Much  of  Boston's  business  is  still 
housed  behind,  as  it  were,  portable  or  shifting  galvanized  out- 
sides.2  In  the  apartment  and  tenement  housing  is  found  a 
parallel  to  the  housing  of  business. 

After  providing  the  well-to-do  apartment  house  (without 
children)  and  the  moderate  tenements,  capital  shies  at  work- 
ing down  to  the  foot  of  the  list,  but  leaves  the  finishing  stroke, 
the  housing  of  the  humblest  laborer,  as  a  problem  for  society 
and  the  social  worker  to  solve.    There  is  one  rule  that  capital 

^  The  A  B  C  of  Taxation,  p.  150. 
*  Ibid.,  pp.  60-61. 


Taxation  and  Housing 


169 


may  be  trusted  to  follow,  viz.,  that  while  it  can  get  a  double 
or  treble  rate  on  its  present  investments,  it  will  lack  the  in- 
centive to  supply  a  new  housing  which  demands  a  double 
investment  at  half  the  rate.^ 

For  the  satisfactory  solution  of  this  problem,  the  housing 
of  the  millions,  there  is  required  the  same  kind  of  money,  but 
still  more  brains,  coupled  with  public  spirit  and  civic  pride 
which,  by  the  gentle  compulsion  of  a  rectified  self-interest  will 
force  capital  into  the  role  of  a  model  landlord  in  providing  for 
tenants  at  lowest  possible  price  the  best  accommodations  and 
facilities  appropriate  to  the  situation  that  money  can  buy,  ex- 
ample of  which  is  found  in  the  hotels  of  the  D.  O.  Mills  foun- 
dation in  the  city  of  New  York.  In  this  consummation,  the 
landlord  will  find  in  taxation  a  valuable  ally  since,  with  pur- 
chase prices  of  land  reduced  by  the  increased  taxation,  he  can 
do  a  larger  business  on  the  same  amount  of  capital. 

The  proposal  of  a  method  of  just,  scientific,  and  natural 
taxation  is  so  simple  and  unpretending,  that  eager  social  re- 
formers cannot  believe  it  possible  that  it  contains  within  itself 
a  cure  for  the  evils  of  our  time.  They  point  to  the  unequal 
distribution  of  wealth,  the  growth  and  power  of  monopolies, 
the  watered  stocks  and  bonds,  the  bribe-bought  franchises,  the 
usurped  privileges,  the  stolen  lands,  the  wholesale  appropria- 
tion of  public  property  to  private  use;  and  they  ask  how  it 
can  be  possible  that  "  a  mere  fiscal  reform  "  can  bring  relief 
from  all  these  evils.  Nevertheless,  we  have  tried  to  show 
that  it  can.^ 

A  liberal  contribution  to  the  solution  of  the  housing  prob- 
lem may  be  looked  for  in  the  reclamation  of  the  people's  rights 
to  their  alienated  public  lands.     The  public  domain  has  now 

1  The  ABC  of  Taxation,  pp.  58,  59,  60,  70,  77. 

2  Natural  Taxation,  chap.  xiii. 


in 


is 


170         The  Principles  of  Natural  Taxation 

been  practically  absorbed  into  private  hands.  The  Supreme 
Court  has  just  confirmed  a  railroad's  title  to  three  or  four 
billions  of  dollars*  worth  of  California  land,  but  no  Supreme 
Court  can  exempt  such  land  from  equal  taxation  under  any 
general  system.  Taxation  is  the  wide-open  avenue  to  the 
recovery  of  a  nation's  or  a  state's  squandered  natural  re- 
sources. With  an  anti-privilege  president  on  the  congressional 
bridge,  and  the  National  Housing  Association  at  the  wheel, 
the  Ship  of  State  may  beat  steadily  into  the  coveted  haven  of 
every  nation's  destiny — the  welfare  of  its  millions. 


CHAPTER  XII 

Thirty  Years  of  Henry  George,  with  a  Record  of 

Achievements 

IN  1879  Henry  George  in  California  wrote  Progress  and 
Poverty,  a  book  which  met  with  a  wide  sale  and  general 
review,  especially  in  the  Australasian  and  Canadian  domin- 
ions, as  well  as  in  Scotland  and  England,  with  early  transla- 
tion into  German.  The  principles  of  the  single  tax  had  been 
clearly  stated  as  early  as  the  latter  part  of  the  eighteenth  cen- 
tury, but  Mr.  George  was  the  man  of  all  men  up  to  his  time 
to  expound,  exploit,  and  advertise  the  doctrine  in  full  and 
logical  sequence.  Practical  agitation  of  this  reform  dates 
from  the  appearance  of  Progress  and  Poverty. 

In  1882  Mr.  George  stumped  Ireland,  and  again  in  1884 
made  a  three  months'  tour  throughout  Great  Britain,  speak- 
ing in  the  principal  cities  to  large  audiences,  and  making  a 
strong  impression.  In  1890  there  followed  a  nine  months* 
trip  to  Australia  and  around  the  world. 

Great  reforms  can  usually  be  traced  to  their  ultimate  sources 
in  the  thought  and  utterances  of  great  men,  and  it  appears  that 
from  the  seed  sown  during  these  tours  there  sprang  the  Eng- 
lish movement  for  land  taxation.  It  is  particularly  inter- 
esting to  note  that  it  was  less  than  two  years  after  Henry 
George's  visit  that  New  Zealand  began  to  enact  tax  laws 
looking  to  the  concentration  of  local  taxes  upon  the  land. 
In  England,  Germany,  Australasia,  and  Canada,  the  last  fif- 
teen or  twenty  years  have  seen  important  changes   in  the 

171 


172 


The  Principles  of  Natural  Taxation 


methods  of  taxation,. which  single  taxers  may  justly  consider 
advances  in  their  direction. 

I.       BRITISH    COLUMBIA* 

Of  the  nine  Canadian  provinces,  three  have  taken  impor- 
tant steps  toward  the  single  tax.  In  British  Columbia  provin- 
cial revenue  is  still  derived  from  poll,  property,  and  income 
taxes;  but  since  1891  municipalities  have  been  permitted  to 
exempt  improvements  from  taxation  in  part  or  in  whole. 
Since  1892,  in  fact,  municipalities  have  not  been  permitted 
to  assess  improvements  at  more  than  50  per  cent  of  their 
actual  value.  Under  the  authority  thus  granted,  all  the  im- 
portant urban  and  many  rural  municipalities  now  exempt  im- 
provements, thus  raising  practically  all  local  revenue  from 
land.  The  following  cases  furnish  the  best  examples  of  this 
tendency : 

Burnaby.  —  A  municipality  bordering  on  Vancouver,  has 
from  its  incorporation  in  1892  totally  exempted  improvements 
from  taxation.  The  rate  on  wild  lands  is  practically  double 
that  upon  improved  lands. 

New  Westminster.  —  Adjoining  Burnaby,  oldest  munici- 
pality in  the  province,  chartered  in  i860;  improvements  ex- 
empted from  taxation  in  191 1  by  a  vote  of  248,  against  98. 
Ratification  by  a  vote  of  the  Council  unanimous.  Population 
over  20,000;  valuation  of  land,  $16,600,000. 

North  Vancouver.  —  Incorporated  in  1906,  when  it  was  set 
off  from  the  District  of  North  Vancouver,  which  during  its 
existence  of  over  twenty  years  has  never  taxed  improvements. 
The  city   of   North   Vancouver  in   191 1    assessed   land   at 

*  The  facts  concerning  Canada  have  been  taken  largely  from  the  "Van- 
couver number"  of  the  Single  Tax  Review,  May-June,  1912  (150  Nassau 
Street,  New  York)  ;  and  Provincial  and  Local  Taxation  in  Canada,  by  S. 
Vineberg  (New  York,  1912). 


Thirty  Years  of  Henry  George 


173 


$9,400,000  and  improvements  at  $1,420,000,  or  nearly  double 
the  valuation  of  the  previous  year. 

Point  Grey.  —  A  residential  suburb  of  Vancouver,  seat  of 
the  University  of  British  Columbia,  population  in  1911, 
30,000;  incorporated  as  a  municipality  in  1908;  improvements 
exempted  from  taxation.  Wild  lands  taxed  at  a  rate  nearly 
double  that  on  improved  lands. 

South  Vancouver.  —  Population  30,000 ;  incorporated  as  a 
municipality  in  1892;  50  per  cent  of  improvements  then  ex- 
empted from  taxation.  Improvements  totally  exempt  since  1903. 

Vancouver.  —  Population  in  1914  about  110,000;  value  of 
land  $150,000,000;  improvements  $76,000,000.  Terminus  of 
the  Canadian  Pacific  Railroad;  has  one  of  the  finest  natural 
harbors  in  the  world,  and  is  the  chief  shipping  port  for  Japan, 
China,  Australia,  etc.  Largest  city  of  the  province.  In  1896 
50  per  cent  of  the  value  of  improvements  was  exempted  from 
taxation.  Ten  years  later  in  1906  the  exemption  was  increased 
to  75  per  cent.  In  19 10  the  exemption  was  made  complete. 
L.  D.  Taylor,  then  Mayor  of  Vancouver,  says  of  it: 

From  the  beginning  the  cities  of  the  Canadian  West  have 
taken  the  initiative  in  promoting  the  single-tax  policy  by  putting 
it  into  actual  operation,  while  other  municipal  governments  have 
not  reached  beyond  the  theoretical.  Vancouver's  policy  of  valu- 
ing land  at  full  capital  value  and  improvements  at  only  50  per 
cent,  thereby  taxing  building  only  half  as  much  as  sites,  was 
adopted  long  before  the  single-tax  leaders  had  begun  their  cam- 
paign of  education  that  today  reaches  around  the  world.  And 
so  satisfactory  was  this  first  experiment  that  when  the  further 
reduction  of  25  per  cent  was  made,  so  as  to  tax  the  capital  value 
of  improvements  only  one-quarter  as  much  as  that  of  sites,  the 
opposition  was  so  small  as  to  be  scarcely  worth  taking  into 
account.  The  last  step  taken  —  the  adoption  of  the  single-tax 
system  in  its  entirety  —  has  placed  Vancouver  in  the  unique 
position  of  being  the  only  city  of  metropolitan  size  on  the  conti- 
nent to  elect  a  municipal  government  on  a  single-tax  platform. 


m 


V    I 


It 


fi 


ill  . 


174         The  Principles  of  Natural  Taxation 

Victoria.  —  The  capital  of  the  province;  population  over 
30,000  in  191 1.  After  exempting  25  per  cent  of  the  value  of 
improvements  from  1894  to  1896,  and  50  per  cent  from  1896 
to  191 1,  Victoria  made  the  exemption  complete  in  191 1.  The 
assessed  value  of  land  in  1913  was  $89,000,000. 

II.      ALBERTA  ^ 

In  this  province  the  term  "  town  "  refers  only  to  such  places 
as  are  incorporated  as  towns  under  a  Town  Act.  It  does  not 
include  villages  or  rural  municipalities.  Rural  municipalities 
were  first  organized  in  19 12,  and  were  required  without  ex- 
ception to  levy  their  taxes  on  land  values  only.  Fifty-two 
were  established  during  the  first  year.  Ninety-seven  of  the 
ninety-eight  villages  and  forty-five  of  the  forty-seven  towns 
existing  in  1914  were  required  to  tax  land  values  only.  This 
being  a  very  new  country,  the  number  of  rural  municipalities, 
villages,  and  towns  is  rapidly  increasing. 

Until  191 3  the  provincial  taxes  in  Alberta  were  confined 
practically  to  taxes  on  corporations,  railways,  and  inheritances. 
In  that  year,  however,  the  province  passed  what  is  apparently 
the  first  unearned-increment  tax  law  to  be  placed  upon  an 
American  statute  book.  By  this  law  the  provincial  treasury 
at  transfer  takes  one-twentieth  of  all  increases  in  urban  land 
values.  In  191 4  the  province  decided  to  meet  its  war  quota 
by  levying  a  tax  on  wild  lands  at  the  rate  of  ten  mills  on  the 
dollar.  In  191 5  the  province  received  about  $1,500,000  from 
the  proceeds  of  this  tax. 

Several  cities  and  many  villages,  under  authority  granted 
them,  have  for  years  exempted  improvements  or  assessed  them 
at  part  of  their  value  only.     In  191 2  the  province  enacted 

*  On  Alberta,  in  addition  to  references  previously  given,  see  Single  Tax 
Review,  September-October,  191 1. 


Thirty  Years  of  Henry  George 


175 


three  laws,  practically  without  opposition,  requiring  the  towns, 
with  two  exceptions,  all  rural  municipalities,  and  all  villages, 
to  raise  their  local  revenues  exclusively  from  taxes  assessed 
upon  land  according  to  its  actual  cash  value. 

The  six  cities  in  the  province  have  special  charters  which 
grant  them  wide  discretion  in  taxation.  Edmonton  and  Medi- 
cine Hat  tax  land  only.  The  other  four  are  gradually  chang- 
ing their  methods  with  a  view  to  abolishing  taxes  on  improve- 
ments within  a  few  years.  The  city  of  Red  Deer  has  a  small 
business  tax  only  in  addition  to  the  tax  on  land. 

Edmonton,  which  in  191 4  had  a  population  of  about 
75,000,  has  exempted  improvements  since  1904.  It  also  con- 
trols all  public  utilities,  owning  and  operating  water  works, 
electric  lighting  and  power  plant,  street  railways,  and  a  tele- 
phone system. 

ni.      SASKATCHEWAN 

In  all  rural  municipalities  land  values  alone  are  taxed.    In 

1914  these  municipalities  began  to  levy  an  additional  tax  about 
6%  cents  per  acre  on  uncultivated  lands,  with  the  object  of 
discouraging  speculation. 

Cities,  towns,  and  villages  formerly  assessed  improvements 
at  60  per  cent  of  their  value.  In  1908,  however,  villages  were 
permitted  to  confine  taxation  to  lands,  excluding  improve- 
ments, and  no  less  than  thirty  have  already  availed  themselves 
of  this  opportunity.  In  191 1  a  law  was  enacted  fixing  60  per 
cent  as  the  maximum  percentage  permissible,  and  authorized 
cities  and  towns  to  reduce  the  assessment  of  buildings  below  . 
this  figure,  by  not  more  than  1 5  per  cent  per  annum.  Regina,\ '  \  \  • 
the  capital  city,  at  once  took  advantage  of  the  act,  so  that  inj 

191 5  buildings  were  entirely  exempted  from  taxation.  Prac- 
tically all  the  towns  and  cities  are  following  the  same  policy. 


II 


176         The  Principles  of  Natural  Taxation 

The  movement  for  the  exemption  of  improvements  has 
spread  eastward  into  Manitoba  and  Ontario.  The  rural  dis- 
tricts of  Manitoba  confine  taxation  largely  to  land,  and  the 
capital,  Winnipeg,  since  1909,  has  exempted  one-third  of  the 
value  of  buildings.  In  Ontario  three  hundred  municipalities 
have  petitioned  for  power  to  reduce  taxes  on  improvements. 
By  23  to  I,  the  Toronto  City  Council,  in  January,  19 13,  sub- 
mitted to  the  citizens  the  question  of  exempting  buildings, 
whereupon  the  citizens  voted  in  the  affirmative  4  to  i. 

IV.      NEW  ZEALAND  ^ 

Since  1891  New  Zealand  has  levied  a  separate  tax  on  land 
values  which  in  191 5  was  at  the  rate  of  id  in  the  pound  of 
the  unimproved  value.  In  addition  to  this  ordinary  tax  on 
all  land,  from  which  only  estates  worth  less  than  £500  are 
exempt.  New  Zealand  also  imposes  a  graduated  tax  on  large 
estates.  The  purpose  of  this  graduated  tax  is  to  break  up  the 
large  estates  which  obstructed  the  growth  of  the  country. 
The  tax  begins  with  a  rate  of  1/32  of  a  penny  in  the  pound 
for  estates  worth  £5,000,  and  increases  to  sH^  P^r  pound 
upon  estates  valued  at  £200,000  or  more.  To  a  considerable 
extent  this  graduated  tax  has  accomplished  its  purpose. 

Prior  to  1896  local  taxes  had  been  levied  upon  either  the 
capital  value  or  the  income  of  real  estate,  as  each  locality  might 
elect.  The  law  of  1891  imposing  a  state  tax  on  land  values, 
exclusive  of  improvements,  called  attention  to  the  desirability 
of  permitting  local  governments  to  raise  their  taxes  in  a  sim- 
ilar manner.  Accordingly  in  1896  local  bodies  were  empow- 
ered to  levy  their  rates  on  the  unimproved  value  of  land,  if 
they  so  desired.  By  191 5  not  less  than  132  districts  had  adopted 

*  See  the  "  New  Zealand  number  "of  the  Single  Tax  Review,  Septem- 
ber-October, 1912,  and  Land  Values,  June,  1915. 


Thirty  Years  of  Henry  George 


177 


this  method  of  taxing  land  values,  and  a  British  Parliamentary 
Report  of  1906  showed  that  the  result  had  been  satisfactory  at 
every  point.^  Concerning  the  working  of  this  method  the 
Commissioner  of  Taxes  of  New  Zealand  wrote  in  1906:  "  The 
tendency  of  this  system  of  taxation  is  not  to  increase  rent,  but, 
on  the  contrary,  as  the  tax  becomes  heavier,  it  tends  to  bring 
into  beneficial  occupation  land  not  put  to  its  best  use,  and  so 
reduces  rents,  the  improvements  being  free  from  all  rates  and 
taxes." 

V.       NEW  SOUTH  WALES 

New  South  Wales  introduced  a  state  tax  on  land  values 
in  1895,  and  subsequently  extended  this  method  of  taxation 
into  local  finance.  The  following  statement  recently  signed  by 
90  mayors  and  aldermen  shows  the  success  of  the  system: 

It  has  reduced  the  rates  of  a  very  large  proportion  of  the  rate- 
payers, although  we  are  raising  a  larger  revenue.  It  has  stimu- 
lated the  building  trade,  employment  is  more  constant,  and  busi- 
ness generally  is  on  a  much  sounder  footing.  It  has  induced  a 
number  of  ratepayers  to  build,  or  dispose  of  land  which  they 

were  not  able  or  willing  to  use  themselves It  specially 

benefits  those  ratepayers  whose  use  of  land  is  most  effective  and 
creditable  to  the  municipality,  while  it  has  put  effective  pressure 
upon  a  number  of  owners  of  idle  or  partly  used  land  to  change 
their  tactics.^ 

It  is  not  surprising,  therefore,  that  in  191 5,  with  a  few 
trifling  exceptions,  the  189  local  authorities  imposed  their  local 
rates  exclusively  upon  land  values. 

VI.       SOUTH    AUSTRALIA 

South  Australia  introduced  a  state  tax  on  unimproved  land 
values  in  1884,  at  the  uniform  rate  of  J4rf  in  the  pound.    Ten 

^Papers  Relative  to  the  Taxation  of  the  Unimproved  Value  of  Land  in 
New  Zealand,  New  South  Wales,  and  South  Australia,  Cd.  3191  (ipoo). 
'Land  Values,  p.  19  (June,  iQiS). 


II 


I 


■I 


178         The  Principles  of  Natural  Taxation 

years  later  an  additional  ^rf  was  imposed  on  estates  valued  at 
more  than  £5,000,  and  upon  estates  owned  by  absentees  an 
additional  tax  was  levied  at  the  rate  of  one-fifth  of  the  tax 
otherwise  payable.  Though  intermediate  changes  have  been 
made,  the  rates  of  1884  and  1894  now  stand.  One-fifth 
of  the  tax  revenue  of  the  state  is  obtained  from  this 
source. 

More  recently  South  Australia  has  authorized  local  gov- 
ernments to  impose  their  taxes  upon  land  values  exclusively, 
exempting  not  only  buildings,  fences  and  drains,  but  all  forms 
of  personal  property. 

Eight  municipalities  have  adopted  this  system  and  it  is 
hoped  that  others  will  follow. 

VII.      OTHER  AUSTRALIAN  STATES 

Every  state  in  Australia  except  Queensland  now  has  in 
some  form  a  state  tax  on  land  values.  Queensland  raises  its 
local  revenues  wholly  from  taxes  on  land  values ;  while  West- 
ern Australia  and  Victoria  have  made  a  beginning  in  this 
direction. 

VIII.      THE  COMMONWEALTH  OF  AUSTRALIA 

In  1910  the  federal  government  of  Australia  adopted  a 
federal  tax  upon  the  land  value  of  all  estates  having  an  un- 
improved value  in  excess  of  £5,000.  The  constitutionality  of 
this  act  was  assailed  before  the  High  Court  of  Australia,  but 
without  success. 

In  spite  of  the  high  exemption  provided  for  by  the  law  and 
the  diflficulties  of  carrying  out  the  valuation  and  assessment 
over  the  whole  extent  of  Australia,  the  tax  has  yielded 
more  than  £1,300,000.     Since  the  beginning  of  the  war  the 


Thirty  Years  of  Henry  George 


179 


land  tax  has  been  increased  to  yield  £1,000,000  additional 
revenue. 

IX.      KIAO-CHAU  ^ 

The  first  of  the  recent  German  experiments  in  taxing  the 
unearned  increment,  and  the  one  which  pointed  the  way  for 
others,  was  made  in  the  model  German  colony  of  Kiao-Chau 
which  was  established  in  1897  in  China.  The  land  and  tax 
ordinance  of  1898  imposed  a  tax  of  33 >4  per  cent  of  any 
increment  of  value  accruing  thereafter  to  private  purchasers 
of  lands  acquired  from  the  government.  The  purpose  was  to 
check  land  speculation,  insure  to  settlers  a  reasonable  price  for 
land,  and  secure  for  the  government  part  of  any  future  incre- 
ment due  to  the  large  expenditures  made  in  establishing  and 
developing  the  new  colony.  Provision  was  made  for  a  land 
tax  of  6  per  cent  on  the  value  of  land,  exclusive  of  improve- 
ments, and  a  tax  on  land  sales  at  auction.  This  ordinance  sud- 
denly and  unexpectedly  realized  the  German  land  reformers' 
program,  in  a  German  colony  under  the  direct  control  of  the 
imperial  government.  It  naturally  aroused  great  interest  in 
Germany,  and  soon  led  to  attempts  to  tax  the  unearned  incre- 
ment in  various  German  cities. 

X.      GERMAN    CITIES 

The  Prussian  law  of  1893,  regulating  local  taxation,  au- 
thorized local  governments  to  introduce  an  important  change 
in  the  taxation  of  land.  Prior  to  that  time  land  had  been  taxed 
upon  its  estimated  yield,  with  the  result  that  land  held  for  spec- 
ulative purposes  was  very  lightly  taxed.  The  law  of  1893 
authorized  localities  to  change  the  basis  of  assessment  to  the 
capital  value  of  the  land,  a  change  which  has  been  made  by 

*  See  article  by  Dr.  W.  Schrameier  in  Single  Tax  Review,  March- April, 
191 1. 


I 


180         The  Principles  of  Natural  Taxation 

several  hundred  local  governments  in  the  face  of  hostility  of 
speculators  and  large  landowners.  The  change  has  worked 
well  in  other  respects,  and  has  materially  increased  the  taxes 
paid  by  unimproved  land. 

The  second  step  in  the  direction  of  heavier  taxation  of  land 
values  has  been  the  introduction  in  many  cities  of  special  taxes 
on  the  unearned  increment,  modeled  after  the  ordinance  of 
Kiao-Chau.  Such  experiments  were  found  to  be  authorized  by 
the  Prussian  law  of  1893  regulating  local  taxation,  and  since 
1904  several  other  States  have  taken  action  in  this  direction. 

Among  the  cities  Frankfort  and  Cologne  took  the  lead, 
introducing  increment  taxes,  respectively,  in  1904  and  1905. 
Their  example  was  rapidly  followed  by  scores  of  other  places, 
including  most  of  the  large  cities,  until  by  1910  the  increment 
tax  was  in  operation  in  457  cities  and  towns  and  was  yielding 
a  substantial  revenue.  The  rates  of  taxation  ranged  from  i 
per  cent  to  25  per  cent  of  the  amount  of  the  increment. 

XI.      THE  GERMAN   EMPIRE 

In  191 1,  after  two  years  of  discussion,  the  German  Empire 
introduced  an  imperial  tax  upon  the  unearned  increment.  This 
law  imposed  a  progressive  tax,  increasing  according  to  the 
percentage  which  the  increment  bore  to  the  original  value  of 
the  land.  Then  it  took  10  per  cent  of  the  increment  when 
that  amounted  to  10  per  cent  of  the  original  value,  and  in- 
creased I  per  cent  for  each  additional  20  per  cent  of  increment 
until  it  reached  19  per  cent  on  increments  ranging  from  170 
per  cent  to  190  per  cent.  From  that  point  it  increased  i  per 
cent  for  every  additional  10  per  cent  of  increment,  until  it 
reached  30  per  cent  on  all  increments  of  290  per  cent  and  over. 

This  imperial  tax  was  intended  to  unify  the  taxation  of  the 
unearned  increment  throughout  the  Empire  and  replaced  the 


Thirty  Years  of  Henry  George 


181 


local  increment  taxes.  To  compensate  the  cities  for  the  reve- 
nue thus  lost,  the  law  provided  that  40  per  cent  of  the  product 
of  the  imperial  increment  tax  should  be  apportioned  to  the 
local  governments;  while  the  states  were  given  10  per  cent  and 
the  Empire  retained  50  per  cent.  Authority  was  granted, 
however,  to  impose  additional  rates  for  local  purposes ;  so  that 
some  measure  of  local  option  was  retained. 

In  19 1 3,  under  pressure  of  added  military  burdens,  a  re- 
adjustment of  imperial  and  state  revenues  was  brought  about. 
The  unearned  increment  tax  was  given  back  to  the  state  and 
local  governments,  and  for  the  benefit  of  the  imperial  treasury 
a  new  tax,  imposing  a  moderate  rate  on  all  increments,  earned 
as  well  as  unearned,  was  established. 

XII.      GREAT  BRITAIN 

The  now  famous  Lloyd-George  Budget  of  1909,  which 
finally  became  a  law  in  1910,  imposed  four  different  taxes 
upon  land,  which  marked  a  long  step  forward  in  the  taxation 
of  land  values.  The  first,  and  most  discussed,  was  the  so- 
called  increment-value  duty.  This  imposes  a  tax  of  20  per 
cent  upon  land  increment  arising  after  1909;  which  shall  be 
payable  by  the  owner  when  land  is  sold,  leased  for  more  than 
fourteen  years,  or  transferred  at  death.  Land  held  by  cor- 
porate bodies  and  not  changing  hands  shall  pay  the  tax  every 
fifteen  years.  The  tax  amounts  to  20  per  cent  of  the  incre- 
ment that  shall  have  accrued  since  1909,  or  the  last  time  that 
the  tax  shall  have  been  paid.  To  carry  the  law  into  effect  it 
was  necessary,  of  course,  to  provide  for  a  full  valuation  of 
all  the  land  in  Great  Britain,  in  order  to  determine  its  value, 
exclusive  of  improvements,  in  the  year  1909.  This  work  is 
now  imder  way;  and  it  will  result  in  a  monumental  survey 
comparable  to  Domesday  Book. 


-t) 


V'  1 


(.   . 


i 


182         The  Principles  of  Natural  Taxation 

The  second  tax  is  the  reversion  duty,  which  imposes  a  tax 
of  lo  per  cent  on  the  increment  or  benefit  accruing  to  any 
lessor  at  the  expiration  of  a  lease.  Agricultural  land  is  exempt, 
and  leases  for  twenty-one  years  or  less  are  also  excepted  from 
the  operation  of  the  reversion  duty.  Reversions  purchased 
before  1909  are  exempt  provided  the  lease  expires  within  forty 
years  from  the  date  of  purchase.  Finally  provision  is  made 
that  reversion  duty  shall  not  be  paid  in  respect  to  increment 
or  benefit  upon  which  increment  value  duty  may  have  been 
paid. 

The  third  tax  is  the  undeveloped  land  duty  which  is  payable 
annually  by  the  owner  of  undeveloped  land.  Its  rate  is  half- 
penny in  each  pound  of  the  site  value  of  such  land,  the  value 
to  be  ascertained  in  1909  and  each  fifth  year  thereafter;  and 
proper  allowance  will  be  made  for  increments  of  value  upon 
which  increment  duty  may  have  been  paid.  Land  Is  to  be  con- 
sidered undeveloped  if  not  built  on  or  used  for  some  business 
other  than  agriculture.  Various  exemptions  are  granted,  for 
instance,  to  land,  the  site  value  of  which  does  not  exceed  £50 
per  acre,  land  kept  free  from  buildings  in  pursuance  of  some 
definite  plan  of  development,  and  parks,  gardens,  or  open 
spaces  to  which  the  public  has  access. 

The  fourth  tax  is  the  mineral  rights  duty,  which  is  levied 
annually  at  the  rate  of  5  per  cent  on  money  received  by  owners 
for  the  right  to  work  minerals  and  for  way-leaves.  If  the 
owner  works  the  minerals  himself,  he  is  required  to  pay  upon 
what  he  might  have  received  in  rents  or  royalties. 

Since  the  land  valuation  has  not  yet  been  completed  the 
financial  importance  of  these  new  taxes  cannot  be  determined. 
They  are  very  important,  however,  in  establishing  a  principle 
and  in  requiring  a  valuation  of  all  the  land  of  Great  Britain. 
When  the  valuation  is  completed  it  is  the  intention  of  the  tax 


Thirty  Years  of  Henry  George 


183 


reformers  to  move  for  a  reform  of  local  taxation,  by  which 
local  rates  shall  be  levied  exclusively  upon  land  values. 

XIII.     UNITED  STATES 

Much  progress  has  been  made  along  administrative  lines 
toward  the  exemption  of  improvements.  Legislation,  more- 
over, has  been  enacted  in  Colorado  and  Pennsylvania.  Ini9i3 
the  city  of  Pueblo,  Colorado,  taking  advantage  of  the  home 
rule  amendment  of  191 2,  amended  its  charter  so  as  to  provide 
for  the  exemption  of  improvements  to  the  extent  of  50  per 
cent  the  first  year  and  99  per  cent  thereafter.  In  19 13  Penn- 
sylvania passed  a  law,  which  applies  to  Pittsburgh  and  Scran- 
ton,  providing  for  the  eventual  reduction  of  the  rate  on 
improvements  by  one-half. 

While  further  advance  of  the  movement  in  the  United 
States  is  handicapped  in  most  states  by  legislative  constitutional 
restrictions,  it  is  probably  true  that  a  larger  percentage  of 
ground  rent  is  reclaimed  by  the  community  through  taxation 
in  the  states  of  Massachusetts  and  New  York  than  in  any  other 
territory  in  the  world.  Yet  in  contrast  with  these  gradual 
British  and  colonial  attainments,  the  record  of  the  United 
States  for  actual  achievement  is  a  comparative  blank.  This 
condition  in  the  birthplace  and  home  of  the  great  expounder 
himself  is  not  easy  to  account  for,  except  in  so  far  as  con- 
stitutional requirements  of  uniformity  prevent  experiment.  In 
England  the  fact  that  the  land  question  has  long  been  far  more 
acute  than  it  is  in  the  United  States  has  had  much  to  do  with 
the  more  rapid  progress  of  the  single  tax.  The  concentration 
of  land  ownership  in  England  is  unparalleled  in  the  United 
States.  The  irritating  spectacle  of  enormous  entailed  estates, 
with  large  areas  held  for  game  preserves,  and  the  practical 


m 

i) ;  i 


!,:■  [1 


184         The  Principles  of  Natural  Taxation 

exemption  of  land  from  all  local  taxation,  has  fomented  a 
state  of  public  opinion  favorable  to  single-tax  ideas.  In  the 
British  colonies,  the  movement  for  the  single  tax  may  be  ex- 
plained in  part  by  reference  to  the  peculiar  texture  of  the 
colonial  mind.  The  colonists  are  extremely  hospitable  to  new 
considerations  and  receptive  to  new  conclusions,  if  only  they 
appear  to  be  sound.  Charged  with  building  new  dominions, 
they  unconsciously  join  hands  for  the  realization  of  what  seem 
to  them  the  best  things  in  government  and  state. 

More  important,  however,  than  any  other  factor  in  the 
practical  results  of  the  two  cases  is  the  difference  between 
the  English  and  the  American  methods  of  procedure.    In  the 
British  Empire  the  voters  begin  at  once  to  discuss  among  them- 
selves and  within  themselves  the  advantages  of  the  land  tax, 
and  straightway,  by  the  very  cohesion  of  a  common  thought, 
they  set  about  to  get  it  with,  as  it  were,  one  heart  and  voice,  by 
enactment  of  land  laws.    In  this  country  the  voters  are  of  a 
different  type;    they  are  mostly  too  busy  to  concern  them- 
selves with  making  even  their  own  laws.     Consequently  the 
cause  has  been  consigned  to  scattered  organizations,  which 
have  proceeded  to  discuss  the  theoretical  possibilities  and  im- 
possibilities and  probabilities  of  every  phase  of  the  land-tax 
question,  combined  with  other  questions  more  or  less  related, 
to  the  end  of  the  catalogue.    To  a  world  hungering  to  know 
of  the  doctrine  of  Henry  George  a  great  and  efficient  lecture 
bureau  bearing  his  name  offers,  in  a  prospectus  of  forty-one 
lecturers  with  eight  topics  that  are  pure  single  tax  and  ninety- 
two  that  are  not,  a  composite  menu  of  such  conflicting  merit, 
taste,  and  relevancy  that  most  of  the  inquiring  guests  leave  the 
table  with  small  desire  to  come  again.    Mr.  Thomas  G.  Shear- 
man lamented  that  "in  all  times  it  has  been  the  misfortune  of 
reforms  that  some  of  their  advocates  have  made  it  impossible 


Thirty  Years  of  Henry  George 


185 


for  others  to  do  any  effective  work  for  them,  for  considerable 

periods At  this  time  the  professed  friends  of  every 

reform  in  which  I  am  much  interested  have  insisted  upon  mix- 
ing it  with  retrograde  movements  or  have  adopted  a  policy  of 
bitterness  and  vituperation  or  have  thrown  it  entirely 
overboard.'* 

This  hectic  discussion  which,  it  must  be  admitted,  does  not 
enlist  a  mind  of  the  serious  English  type,  has  been  perpetual 
in  club,  in  league,  on  lecture  platform,  by  spokesmen  and 
organs,  until  the  conclusion  seems  unavoidable  that  in  Ameri- 
can centers  the  more  numerous  the  militant  single  taxers,  the 
less  progress  toward  the  single  tax.  Th$  record  to  date  in  our 
own  country,  adjoining  the  very  domains  of  greatest  advance, 
presents  an  unenviable  contrast.  Thus,  at  the  end  of  a  quarter 
of  a  century  succeeding  the  George  revival  that  followed  his 
candidacy  for  mayor  of  New  York  in  i886,  there  is  no  or- 
ganized body  of  people  in  the  United  States  pledged  to  the 
propagation  of  his  doctrine  as  he  taught  it.  So  far  as  these 
sporadic  methods  have  prevailed,  some  have  been  a  positive 
hindrance  and  detriment  because  they  have  accomplished  noth- 
ing upon  their  own  desultory  lines,  but — what  is  of  infinitely 
greater  import  —  they  have,  by  keeping  the  cause  in  discredit 
with  the  mass  of  thoughtful  people,  estopped  anything  akin 
to  the  English  movement.  Perhaps  one  of  the  greatest  impedi- 
ments to  the  popular  consideration  of  the  single  tax  is  the 
misconception  that  it  involves  the  abolition  of  the  institution 
of  private  property  in  land.  In  this  connection  it  is  significant 
to  observe  that  in  none  of  the  "achievements"  noted  above 
has  the  economic  argument  for  the  proposed  tax  reform  been 
tainted  with  any  suggestion  for  the  destruction  of  the  private 

ownership  of  land. 

If  any  one  thing  is  prominently  in  evidence,  it  is  that  the 


■i: 


»,- 


111- 


I 


186         The  Principles  of  Natural  Taxation 

formal  combination  of  the  single  tax  with  political  action  and 
methods  has  been  uniformly  disastrous  to  the  single  tax.  When 
Progress  and  Poverty  was  scarcely  three  years  old,  its  author, 
under  the  auspices  of  Patrick  Ford  and  the  Irish  World,  was 
drafted  into  the  service  of  the  Irish  National  Land  League 
to  share  with  Pamell  and  Davitt  and  Dillon  and  O'Kelly  their 
platform,  arrest,  and  jail,  in  an  Irish  maelstrom  that  ended 
in  Fenian  outrages,  with  later  an  inside  view  of  two  Irish 
bastiles,  until  Henry  George  wrote,  "The  whole  situation  is 
very  bad  and  perplexing.    The  Land  League  on  both  sides  of 
the  water  seems  to  me  to  be  smashed."    Meantime  the  "rem- 
edy" of  Henry  George,  as  applied  in  Book  viii  of  Progress 
and  Poverty,  had  not  been  at  all  in  issue.    Henry  George  was 
called  to  Ireland,  not  to  preach  union  upon  his  own  peculiar 
doctrine,  but  to  boom  conflicting  views  of  nationalization  by 
purchase,    abolition   without   compensation,   etc.     "With   all 
leaders  save  Davitt  and  Brennan  hostile  to  him  in  principle, 
Henry  George  felt  increasingly  lonely  in  the  Irish  movement." 
Not  a  point  was  scored  then  or  since  for  the  single  tax,  in 
respect  to  which  the  Irish  movement  to  date  has  been  a  retro- 
gression rather  than  an  advance. 

In  this  case  of  Ireland,  Mr.  George  and  his  Progress  and 
Poverty  were  widely  advertised,  but  this  advantage,  such  as 
it  was,  was  far  more  than  offset  by  a  lowered  moral  plane, 
especially  when  a  fresh  single-tax  "  flag  for  all  nations  "  was 
bedraggled  in  the  mire.  It  is  difficult  to  see  how  this  Irish 
experience  could  have  otherwise  than  marred  the  prestige  of 
Progress  and  Poverty  and  its  author,  who  was  at  this  time 
"next  to  Gladstone  the  most  talked  of  man  in  England,"  and 
at  this  sober  distance  we  may  be  excused  for  sympathizing 
with  his  venerable  parents,  whom  he  was  called  to  mourn  at 
this  time.     "They  had  died  when  their  son  Henry  was  get- 


Thirty  Years  of  Henry  George 


187 


ting,  so  far  as  they  could  see,  as  much  blame  as  praise  from 
the  world."  The  peril  of  the  single  tax  in  England  today,  as 
it  was  in  Ireland,  lies  in  trying  prematurely  to  make  it  a 
political  issue,  instead  of  letting  it  win  its  own  way. 

The  supreme  political  event  in  Mr.  George's  life  was,  of 
course,  his  first  candidacy  for  mayor  of  New  York.  The  labor 
unions  united  upon  him,  not  as  a  single-tax  candidate  on  a 
single-tax  platform,  but  in  the  hope  that  his  fame  might  win 
out  for  them.  Roosevelt  had  60,000  votes  and  George  had 
68,000,  while  Hewitt  obtained  90,000  and  was  elected.  The 
failure  to  receive  a  majority  of  votes  did  not  represent  all  of 
Mr.  George's  loss.  He  lost  infinitely  more  through  campaign 
misrepresentation,  vituperation,  and  distortion  of  his  doctrine 
by  ignorant  but  well-meaning  friends  as  well  as  by  foes.  It 
must  be  a  bold  historian  who  would  venture  to  say  that  Henry 
George  and  his  cause  stood  any  higher  with  the  world  after 
than  before  this  bitter  campaign. 

Again,  the  following  year  found  him  the  hopeful  candidate 
of  the  United  Labor  party  for  secretary  of  state,  in  confusion 
and  conflict,  especially  with  socialist  persons  and  parties.  The 
Republican  and  Democratic  candidates,  without  particular  can- 
vass, received  459,000  and  480,000  votes,  respectively.  Mr. 
George,  with  a  thorough  canvass,  received  72,000  for  the  state 
and  38,000  for  the  city  of  New  York  as  against  68,000  only 
a  year  before.  This  inflation  and  collapse,  in  one  short  year, 
of  a  political  party  movement,  did  not  look  like  victory  for  a 
great  economic  truth,  and  yet  the  confident  assertion  was  made 
that  the  "  hand  of  the  Lord  "  was  in  it.  No  one  recalled  that 
the  Lord  was  not  in  the  whirlwind  or  in  the  earthquake  or 
in  the  fire,  but  in  "a  still  small  voice";  no  one  protested 
that  in  order  to  usher  in  a  heavenly  reform  it  was  not 
necessary  first  to  "  raise  hell." 


IK 


188         The  Principles  of  Natural  Taxation 

The  Delaware  campaign  begun  in  1895,  ^^  which  Philadel- 
phians,  with  the  cooperation  of  Mr.  George,  Mr.  Garrison, 
and  the  leading  speakers  of  the  cause,  aided  by  liberal  contri- 
butions in  money,  essayed  for  more  than  two  years  to  carry 
that  state  by  election,  for  the  single  tax  proved  a  disappoint- 
ment and  has  had  no  effect  upon  subsequent  legislation.  The 
year  1897  found  Mr.  George  again  a  candidate  for  mayor  of 
New  York,  but  upon  a  platform  in  which  his  own  peculiar 
doctrine  was  not  given  the  recognition  of  even  a  single  plank. 
Henry  George's  campaign  was  ended  by  his  death,  to  which 
his  friends  saw  he  was  foredoomed,  while  the  most  confident 
predictions  of  the  great  prophet,  as  well  as  of  many  a  minor 
prophet,  still  lacked  fulfilment,  and  indeed  remain  lamentably 
unrealized  to  this  day. 

Recently  political  methods  have  once  more  been  invoked 
in  connection  with  the  expenditure  of  hundreds  of  thousands 
of  most  generous  money  and  much  vigorous  and  unselfish 
effort  by  speakers  and  organizers  to  carry  elections  in  Mis- 
souri, Washington,  Oregon,  and  other  parts  of  the  country. 
With  what  result?  —  that  today  in  those  regions  the  press  is 
closed  and  the  farmers*  minds  are  closed,  and  that  both  will 
be  so  much  the  harder  to  open  in  future.  Can  any  Englishman 
be  blamed  for  concluding  that  if  Canada  had  been  subjected 
for  the  last  twenty  years  to  the  mode  of  procedure  which  has 
prevailed  in  the  States,  she  would  not  now  stand  as  she  does 
at  the  head  of  the  single-tax  column? 

We  have  thus  passed  in  brief  review  a  series  of  vigorous 
American  political  movements  extending  over  thirty  hopeful 
years,  and  yet  today,  while  gratifying  economic  harvests  are 
being  reaped  upon  British  soils  that  have  been  patiently  and 
yet  quietly  tilled,  not  an  achievement  is  registered  for  the 
American  method,  which  so  far  has  consisted  mainly  in  lining 


Thirty  Years  of  Henry  Greorge 


189 


men  up  on  every  other  issue  except  the  specific  teaching  of 
Henry  George. 

In  conclusion,  it  cannot  be  gainsaid  that  the  political  method 
as  a  means  of  putting  the  single  tax  on  the  statute  books  has 
been  abundantly  tried  and  found  wanting,  and  the  reasons  for 
its  failure  are  not  far  to  seek.  Voters  cannot  be  persuaded 
to  decree  an  important  legislative  innovation  which  they  do 
not  fully  understand  and  concerning  which  it  is  easy  for  the 
opposition,  in  the  heat  of  a  campaign,  to  deceive  or  confuse 
the  mind.  Moreover,  the  inevitable  mingling  of  extraneous 
issues  and  personal  interests  with  the  economic  point  which 
is  sought  to  be  enforced,  is  certain  so  to  obscure  the  single  tax 
in  any  political  contest  that  it  must  fail  to  obtain  the  consid- 
eration necessary  to  a  fair  verdict  at  the  polls. 

So  much  for  what  ought  not  to  have  been  done ;  and  now 
what  is  it  that  ought  to  be  done  ?  In  answer,  it  may  be  said 
that  the  sum  total  of  experience  in  the  thirty  years  under 
review  enforces  the  conviction  that  persistent  education  of  the 
masses  and  the  classes  —  by  word  of  mouth  and  still  more 
effectively  by  the  printing  press  —  upon  the  pure  issue  of  the 
single  tax  as  the  normal  and  just  basis  for  obtaining  public 
revenue,  is  the  true  means  and  method  of  advancing  this  or 
any  other  great  reform.  To  sow  the  clean  seed  broadcast  and 
to  give  time  and  opportunity  for  its  unforced  growth  in  recep- 
tive minds,  this  is  the  one  irresistible,  because  unresisted,  modus 
operandi  —  this  is  the  surest  as  well  as  the  shortest  path  to  the 
triumph  of  that  economic  justice  which  will  solve  our  economic 
problems. 


b>  ' 


CHAPTER  XIII 
Henry  George  and  the  Economists 

^TpHE  mutual  attitude  of  single  taxers  and  professors  today 
-*•  may  not  be  easy  to  define,  but  the  topic  would  furnish 
to  those  concerned  what  Horace  Greeley  was  wont  to  call 
"mighty  interestin'  readin*/*  Unquestionably,  there  has  been 
among  the  professional  economists  a  tendency  not  so  much 
to  attack  as  perhaps  to  ignore  the  single  taxers.  Among  the 
various  causes  for  this  attitude  one  might  be  assigned  as  a 
certain  pronounced  air  of  bumptiousness  often  observable  on 
the  part  of  single-tax  advocates.  To  this  extent,  without 
doubt,  single  taxers  themselves  will  confess  it  to  be  their  own 
fault  if  the  professors  are  not  enamored  of  them.  Jealous 
for  their  champion  and  sharing  his  sensitiveness  to  the  indiffer- 
ence of  the  professors,  single  taxers  have  allowed  themselves 
even  in  scattered  times  and  places  to  generate  and  foster  a 
spirit  of  animosity  sufficient  to  keep  the  opposing  lines  well 
defined.  The  following  letter  from  Harold  C.  Goddard,  Pro- 
fessor of  English  Literature  in  Swarthmore  College,  is  to  the 
point: 

I  have  long  been  interested  in  Henry  George  and  the  single 
tax,  and  I  have  come  to  the  conclusion  that  one  of  the  greatest 
obstacles  in  the  path  of  this  proposed  reform  is  the  single  taxer 
who  regards  the  single  tax  as  a  panacea,  a  scheme  which,  could 
It  be  adopted,  would  automatically  solve  the  principal  problems 
of  humanity.  This  type  of  single  taxer  is  generally  a  man  of 
intolerantly  dogmatic  and  doctrinaire  spirit ;  and  since  the  doc- 
trinaire spirit  is  the  very  antithesis  of  the  scientific  and  creative 

190 


Henry  George  and  the  Economists  1^1 

spirits,  upon  which  we  must  rely  for  both  national  and  inter- 
national harmony,  any  reform  which  such  a  man  supports  runs 
the  risk  of  encountering  the  skepticism  of  the  wise.  When  there 
are  fewer  of  these  doctrinaires,  no  one  will  be  more  surprised 
than  the  single  taxers  themselves  by  the  sudden  accession  to  their 
ranks  of  hundreds  who,  long  since  convinced  of  the  truth  of 
nine-tenths  of  the  single-tax  platform,  have  shrunk  from  wear- 
ing the  label  "  single  taxer,"  lest  the  inference  be  drawn  by  the 
public  that,  because  they  believe  in  the  single  tax,  they  are  no 
longer  free  to  believe  in  anything  else. 

It  cannot  be  denied,  as  reports  have  shown,  that  single 
taxers  frequently  have  been  inconsiderate  of  the  feelings  of 
the  professors.  On  the  other  hand,  who  is  there  that  can  fur- 
nish any  consequential  list  of  professors  who  have  attacked 
with  any  degree  of  asperity  Henry  George  or  his  particular 
theory  of  taxation? 

Militancy  is  not  without  distinguished  apologists.  There 
are  people  who  believe  that  whatever  is  good  in  the  world 
should  be  fought  for.  Peaceful  people  hold  that  in  a  fight 
the  thing  fought  for  is  apt  to  be  lost  sight  of,  and  that  the 
truth  conquers  in  spite  of  the  fighting.  In  most  fields  of  re- 
form, however,  there  are  plenty  of  fighters  who  can  be  trusted 
to  live  the  gospel  they  profess.  Indeed,  reformers  as  a  class 
esteem  it  the  natural  course  to  fight  the  common  enemy,  often 
to  fight  among  themselves.  Single  taxers  are  no  exception. 
All  their  official  organs  and  their  advocates,  with  few  excep- 
tions, are  heralded  to  "fight"  for  the  cause,  and  they  do  it. 

It  would  be  interesting  to  know  if  there  be  any  consider- 
able number  of  the  many  public  lecturers  and  speakers  for 
the  single  tax  who  have  not  at  some  time  spoken  slightingly 
of  an  economist  or  of  his  profession,  or  what  single-tax  or- 
gans have  not  frequently  or  infrequently  written  disparagingly 
of  the  professor  of  political  economy. 


192         The  Principles  of  Natural  Taxation 

Scholastic  discussions,  unless  carefully  guarded,  are  likely 
to  leave  a  bad  taste  in  the  mouth.  By  a  hasty  or  inconsiderate 
word  a  battle  of  principles  may  degenerate  at  once  into  undig- 
nified personalities.  For  example,  in  a  notable  foreign  in- 
stance, a  certain  professor  is  confronted  by  the  complimentary 
statement  that  "the  teachings  of  modern  economists  begin 
and  end  nowhere";  that  his  own  teachings  "all  through 
showed  a  decided  intellectual  incapacity  to  stand  by  any  posi- 
tive statement " ;  that  his  views  "  illustrate  the  folly  of  rushing 
into  a  controversy  without  preparation  or  knowledge";  and 
that  "he  must  still  be  considered  a  tyro  both  in  economics 
and  ethics."  Yet  this  delinquent  economist  "approved  of 
taxation  of  land  values  twenty  shillings  in  the  pound"  and 
gently  remonstrated,  "Is  it  really  worth  while  to  spend  so 
much  time  and  space  in  attacking  those  who  want  the  same 
thing  you  want?  Is  not  such  conduct  an  example  of  the  per- 
versity and  futility  into  which  these  men  of  one  idea,  whom 
the  world  bluntly  calls  cranks,  so  often  fall?" 

Not  only  are  flagrant  examples  of  offensive  insinuation 
frequent,  but  there  is  a  supercilious,  patronizing  style  of  writ- 
ing that  violates  good  taste,  instances  of  which  might  easily 
be  multiplied.  For  example,  notwithstanding  the  declaration 
of  a  professor  that  if  government  had  started  with  single  tax 
we  should  have  had  from  the  first  a  practically  burdenless 
tax,  and  that  the  land  user  today  is  paying  to  a  private  indi- 
vidual all  that  he  would  pay  to  the  government,  besides  direct, 
indirect,  and  monopoly  taxes,  which  the  single  tax  would 
abolish,  yet,  because  it  is  thought  that  this  professor  "falls 
down"  before  "full  single  tax,"  he  is  reminded,  after  the 
honeyed  compliment  that  he  is  better  posted  than  most  of  his 
university  brethren,  that  he  "owes  it  to  those  who  look 
to  one  in  his  position  for  a  clear  exposition  of  the  principles 


Henry  George  and  the  Economists 


193 


of  political  economy,  to  revise  his  argument."  Is  this  species 
of  veiled  affront  likely  to  win  the  leading  economists,  their 
brethren,  and  their  following  to  our  reform? 

This  backward  survey  may  well  begin  with  the  notable 
gathering  of  economists  and  single  taxers  at  the  Conference 
of  the  American  Social  Science  Association,  Saratoga,  New 
York,  September  5,  1890.  Though  not  without  its  note  of 
discord,  this  was  a  distinguished  occasion,  bringing  together 
a  company  of  truly  representative  men,  many  of  them  today 
men  of  distinction.  The  Conference  was  devoted  entirely 
to  a  discussion  of  the  single  tax.  Besides  Mr.  George,  Messrs. 
S.  B.  Clarke,  Louis  F.  Post,  William  Lloyd  Garrison,  and 
James  R.  Garret  spoke  in  support  of  his  views.  Professors 
J.  B.  Clark  and  E.  R.  A.  Seligman,  both  now  of  Columbia 
University,  Dr.  William  T.  Harris,  United  States  Commis- 
sioner of  Education,  President  E.  Benjamin  Andrews,  then 
of  Brown  University,  Professor  Thomas  Davidson  of  New 
York,  and  Professor  E.  J.  James,  then  of  the  University  of 
Pennsylvania,  took  opposite  grounds.  Mr.  George  was  ac- 
corded every  courtesy  of  debate  by  the  professors.  Regarding 
the  general  harmony  of  this  occasion,  the  secretary  testifies 
that  in  the  records  of  the  Conference  "  no  word  was  expunged 
nor  was  there  any  but  the  most  cordial  feeling  toward  Mr. 
George."  Professor  Seligman,  while  indulging  in  dignified 
resentment  at  Mr.  George's  insinuation  of  hypocrisy  in  the 
ranks  of  the  professors,  said  in  their  defense : 

It  is  grossly  unjust  to  ascribe  to  the  professors  of  political 
economy  a  truckling  or  even  an  unconscious  subservience  to  the 

powers  that  be.    All  history  disproves  this No  one  is  more 

desirous  of  attaining  social  peace,  no  one  has  today  a  deeper 
sympathy  with  the  unhappy  lot  of  the  toilers,  no  one  is  more 
anxious  to  seek  out  the  true  harmony  of  social  interests,  than 
the  student  of  political  economy.     If  we  thought  that  you  had 


K 


y 


W         The  Principles  of  Natural  Taxation 

solved  the  problem,  we  would  enthrone  you  high  on  our  council 
seats;  we  would  reverently  bend  the  knee  and  acknowledge  in 
you  a  master,  a  prophet. 

The  next  important  public  utterance  of  Mr.  George  after 
the    Saratoga    Conference    was   A    Perplexed    Philosopher, 
wherein  he  arraigned  Mr.  Spencer  in  unsparing  terms  for 
recantation  of  what  he,  Mr.  George,  considered  fundamental 
truths.    In  1850  Mr.  Spencer  had  announced  that  private  prop- 
erty in  land  was  wrong.    In  1882  he  announced  that  private 
property  in  land  was  not  wrong.     Mr.  George  vigorously  as- 
sailed the  soundness  and  the  motive  of  this  change  of  views. 
As  between  condemnation  and  argument  in  this  critique,  the 
former  would  seem  at  first  glance  to  preponderate.    It  was  a 
grievance  to  Mr.  George  that  Mr.  Spencer  chose  to  ignore  the 
former's  book  and  his  work,  not  so  much  as  deigning  to  read 
Progress  and  Poverty,  referring  to  it  as  "a  work  which  I 
closed  after  a  few  minutes,  on  finding  how  visionary  were  its 
qualities.''    Also,  Mr.  Spencer  believed  in  materialism  and  evo- 
lution ;  Mr.  George  did  not.    Mr.  George  had  once  met  and 
abruptly  parted  from  Mr.  Spencer  at  a  private  dinner.    Indeed, 
as  a  resultant  of  mutual  mental  hostility  these  two  gentlemen 
were  so  little  enamored  of  one  another  that  one  could  hardly 
expect  to  find  in  A  Perplexed  Philosopher  a  sympathetic 
review  of  Herbert  Spencer. 

The  beginning  of  the  controversy  between  George  and 
Spencer  may  be  traced  back  to  January,  1883,  when  the  Edin- 
burgh Review,  in  an  article  entitled  "  The  Nationalization  of 
Land,"  gave  a  fair  review  of  Progress  and  Poverty,  in  which 
were  coupled  the  names  of  George  and  Spencer,  both  as  asso- 
ciated with  communism.  The  latter,  having  little  or  no  knowl- 
edge of  the  former's  ideas,  shrank  like  a  sensitive  plant  from 
being  classed  with  him,  just  as  hosts  of  sensible  people  will 


Henry  George  and  the  Economists  195 

tell  you  today  that  they  can  affiliate  with  the  single  tax  but 
not  with  the  fads  and  fancies  of  many  single  taxers.  Mr. 
Spencer  was  also  sensitive  that  the  reviewers  should  have 
neglected  his  synthetic  pretentions  until  their  attention  was 
called  to  his  Social  Statics,  a  book  thirty  years  old,  and  even 
then  only  in  connection  with  the  book  of  another  man.  Mr. 
Spencer  stated  his  position  in  a  letter  to  the  St.  James  Gazette 
of  London,  which  called  forth  replies  and  rejoinders  from 
Huxley,  Tyndall,  John  Morley,  John  Laidley,  and  others.  Thus 
was  opened  up  a  controversy  which  from  the  first  exhibited 
in  ample  proportions  the  free  solution  of  testiness.  Finally, 
in  A  Perplexed  Philosopher,  Mr.  George  somewhat  irrel- 
evantly made  analytical  disposal  of  Mr.  Spencer's  pet  synthetic 
labors  of  a  lifetime,  his  evolution  and  his  materialism.  The 
following  isolated  passages  show  the  deflected  judgment  under 
which  he  treated  the  alleged  recantation : 

I  do  not  regard  this  as  controversy.  It  is  rather  exposure. 
In  turning  his  back  on  all  he  has  said  before,  Mr.  Spencer  has 
not  argued,  and  no  explanation  is  possible  that  does  not  impute 

"motives Instead  of  manfully  defending  the  truth  he  had 

uttered,  or  straightforwardly  recanting  it,  Mr.  Spencer  sought 
to  shelter  himself  behind  ifs  and  buts,  perhapses  and  it-may-bes, 

and  the  implication  of   untruths Mr.   Spencer  has  had 

much  to  say  of  the  unfairness  of  his  critics,  but  this  reply  is  not 
merely  unfair;    it  is  dishonest,  and  that  in  a  way  that  makes 

flat  falsehood  seem  manly This  letter  [Mr.  Spencer's]  is 

merely  an  attempt  to  avoid  responsibility  and  to  placate  by  subter- 
fuge the  powerful  landed  interests  now  aroused  to  anger 

Social  Statics  has  been  disemboweled,  stuffed,  mummified,  and 
then  set  up  in  the  gardens  of  the  Spencerian  philosophy,  where 
it  may  be  viewed  with  entire  complacency  by  Sir  John  and  his 

p^^ce Mr.  Spencer  is  thus  untruthful  in  regard  to  what 

he  has  taught  in  Social  Statics;    he  is  equally   untruthful  in 

regard  to  his  suppression  of  that  book This  treatment  of 

land,  or  of  the  surface  of  the  earth,  as  but  one  of  the  natural 
media,  is  in  the  highest  degree  unphilosophic,  and  could  be 


^1 


I 


196         The  Principles  of  Natural  Taxation 

adopted  only   for  the  purpose  of  confusion By  aid  of 

double-barreled  ethics  and  philosophic  legerdemain,  Mr.  Spencer 
evidently   hopes   to  keep   some  reputation   for  consistency  and 

yet    uphold   private   property    in    land They    have    their 

choice  between  intellectual  incapacity  and  intellectual  dishonesty. 
....  He,  Mr.  Spencer,  stands  ready  to  sacrifice  to  his  new 
masters  not  only  his  moral  honesty,  but,  even  what  the  morally 
depraved  often  cling  to  —  the  pretence  of  intellectual  honesty. 
....  In  this  chapter,  "Justice  "on  "The  Right  to  Land,"  he  [Mr. 
Spencer]  proves  himself  alike  a  traitor  to  all  that  he  once  held  and 
to  all  that  he  now  holds  —  a  conscious  and  deliberate  traitor, 
who  assumes  the  place  of  the  philosopher,  the  office  of  the  judge, 
only  to  darken  truth  and  to  deny  justice;  to  sell  out  the  right 
of  the  wronged,  and  to  prostitute  his  powers  in  the  defense  of 

the  wronger Is  it  a  wonder  that  intellectually,  as  morally, 

this  chapter  is  beneath  contempt  ?  .  .  .  .  That  part  of  our  exami- 
nation which  crosses  what  is  now  his  distinctive  philosophy 
shows  him  to  be  as  a  philosopher  ridiculous,  as  a  man  contemp- 
tible—  a  fawning  Vicar  of  Bray,  clothing  in  pompous  phraseology 
and  arrogant  assumption  logical  confusions  so  absurd  as  to  be 
comical. 

Reviewing  the  whole  controversy  today,  it  is  not  easy  to 
see  how  the  rules  of  polemics  justified  the  severe  language  of 
Mr.  George  in  which  he  made  his  isolated  arraignment  of  the 
great  apostle  of  evolution.  Today  a  student  of  Spencer  would 
be  amazed  to  find  his  revision  of  1882  of  his  views  of  1850 
made  the  target  of  such  unmeasured  censure  and  detraction. 
And  what  is  this  offense  of  Mr.  Spencer's  that  so  smells  to 
heaven?  Simply  this,  and  nothing  more:  in  Social  Statics 
he  said  that  private  property  in  land  was  wrong;  in  Justice, 
forty  years  later,  he  said  that  private  property  in  land  was 
not  wrong.  The  initial  error  was  in  the  lack  of  a  clear  defini- 
tion of  the  point  at  issue.  The  tenet  of  the  wrong  of  private 
property  in  land  is  in  itself  generally  conceded  to  be  false 
and  untenable.  But  George  and  Spencer  appear  to  have  con- 
ceived themselves  constrained  to  this  belief  by  the  false  logic 


Henry  George  and  the  Economists  1^7 

of  an  inverted  argument,  to  wit:  Since  all  have  a  common 
right  to  the  rent  of  land,  the  product  of  their  collective  labor 
and  expenditure,  therefore  all  must  have  a  common  right  to 
the  land  itself,  the  gift  of  nature.  Had  the  issue  been  framed 
in  two  propositions,  instead  of  one,  as  follows :  ( i )  All  have 
an  equal  right  to  the  surface  of  the  earth  in  its  original  state, 
because  it  is  a  gift  of  nature;  (2)  all  have  a  common  or  joint 
right  to  the  artificial  rent  of  land,  because  it  is  a  common 
creation  —  there  might  never  have  arisen  the  barren  and  profit- 
less discussion  that  is  now  being  considered  here,  for  then  the 
two  protagonists  might  conceivably  have  come  to  an  agree- 
ment that  the  second  of  these  propositions  is  sound,  while 
the  first  is  crude  and  false. 

In  order  to  show  that  Mr.  Spencer  was  culpable  in  this 
recantation  it  is  needful  for  Mr.  George  to  establish  the  posi- 
tion that  Spencer  was  right  in  saying  in  1850  that  "the  right 
of  mankind  at  large  to  the  earth's  surface  is  still  vahd;  all 
deeds,  customs,  and  laws  notwithstanding."  This  leads  to  a 
survey  and  criticism  of  George*s  argument  of  1891  as  com- 
pared with  Spencer's  on  the  same  point  in  1850. 

Henry  George  wrote,  in  Our  Land  and  Land  Policy,  in 
1872  as  follows: 

It  by  no  means  follows  that  there  should  be  no  such  thing 
as  property  in  land,  but  merely  that  there  should  be  no  monopo- 
lization—  no  standing  between  the  man  who  is  willing  to  work 
and  the  field  which  nature  offers  for  his  labor.  For  while  it  is 
true  that  the  land  of  a  country  is  the  free  gift  of  the  Creator 
to  all  the  people  of  that  country,  to  the  enjoyment  of  which  each 
has  an  equal  natural  right,  it  is  also  true  that  the  recognition  of 
private  ownership  of  land  is  necessary  to  its  proper  use  —  is,  in 
fact,  a  condition  of  civilization. 

This  statement  of  George  can  suffer  no  contradiction.  Its 
truth  is  grounded  in  reason,  science,  and  fact.    Conceding  indi- 


l\ 


^ 


198         The  Principles  of  Natural  Taxation 

vidual  title  to  land,  he  demanded  the  socialization  of  rent  by 
taxation.  Title  to  the  land  itself,  stable  tenure,  estate  in  land, 
ownership  of  land  in  severalty,  whether  its  value  is  one  dollar 
or  a  million  dollars,  is  necessary  to  security  of  improvements. 
Title  to  the  annual  value  of  land  —  ground  rent  —  is  not  neces- 
sary to  the  security  of  improvements,  which  would  be  equally 
secure  whether  one-quarter  or  three-quarters  of  ground  rent 
be  taken  in  taxation.  Neither  in  private  more  than  in  public 
ownership  of  land  is  there  any  moral  or  economic  wrong. 

There  is  a  persistent  though  not  inexcusable  tendency 
among  economists  to  confuse  the  single  tax  and  land  nationali- 
zation. Professor  Seligman,  in  the  eighth  edition  of  his  Essays 
in  Taxation,  thinks  himself  justified  in  laying  before  his 
200,000  students  and  emulators  in  the  United  States  colleges 
and  universities  the  following  version  of  the  single-tax  belief : 

Land  is  the  creation  of  God Therefore  no  one  has  a 

right  to  own  land When  the  change  advocated  is  a  direct 

reversal  of  the  progress  of  centuries,  and  a  reversion  to  primi- 
tive conditions  away  from  which  all  history  has  traveled,  the 
necessity  for  its  absolute  proof  becomes  far  stronger.  The 
nationalization  of  land  is  a  demand  which  in  order  to  win  general 
acceptance  must  be  based  on  theories  independent  of  the  doctrine 
of  equal  right. 

And  lo!  from  whom  does  such  a  rapier  thrust  come  but 
from  a  gracious  professor  to  whom  single  taxers  are  grate- 
fully indebted  for  courtesies  and  hospitalities,  who  has  jour- 
neyed to  promote  its  discussions,  and  who  at  Saratoga  fore- 
stalled by  a  generation  the  single  taxers  themselves  in  the 
inestimable  service  of  blocking  out  a  keystone  to  the  single-tax 
arch,  demonstrating  fully  a  proposition  previously  recognized 
but  not  effectively  utilized,  viz.,  that  the  new  purchaser  of 
land,  buying  as  he  does  free  of  tax,  escapes  all  tax  burdens. 


Henry  George  and  the  Economists  1^9 

Professor  Ely  of  the  University  of  Wisconsin  also  has 
been  favoring  English  farmers  with  his  views,  in  the  following 
language : 

I  have  no  sympathy  whatever  with  the  single  taxer  in  this 

country  or  any  other  country No  civilization  has  been  built 

up  in  modern  times  upon  anything  else  than  the  private  owner- 
ship of  the  land;  and  if  you  remove  that,  as  the  single  taxer 
proposes  to  do,  it  seems  to  me  that  you  would  remove  the  solid, 
substantial  foundation  of  modern  civilization. 

But  what  has  this  to  do  with  the  single  tax?  It  was 
George's  special  triumph  over  Spencer,  that  in  distinctly  con- 
ceding the  legal  ownership,  individual  tenure  of  or  estate  in 
the  land  itself,  the  very  principle  the  truth  of  which  forced 
from  Spencer  his  recantation,  he  corrected  and  advanced  the 
issue  from  the  common  right  to  the  use  of  the  earth  to  the 
joint  right  to  the  enjoyment  of  rent,  making  clear  the  dis- 
tinction that  land  is  one  thing  and  the  rent  of  land  another 
and  different  thing  —  that  to  take  in  taxation  the  rent  of  land 
it  is  not  necessary  to  take  the  land  itself.  The  nationalization 
of  land,  with  its  incidental  enlargement  of  government  func- 
tions, formed  no  part  of  George's  program.  We  appeal  to  the 
brotherhood  of  economists  at  the  present  stage  of  the  art  of 
taxation  to  forgive  us  for  expostulating  lustily  against  such 
a  travesty  of  the  single  tax  as  that  it  implies  the  abolition  of 
the  institution  of  private  property  in  land. 

Is  it,  on  the  other  hand,  complimentary  to  the  keepers  of 
the  single-tax  ark,  and  the  variegated  expositors  of  its  doc- 
trine, that  after  thirty  years  of  discussion  and  disputation 
nearly  every  "objector"  down  to  this  very  day  is  spending 
the  half  of  his  ammunition  upon  deserted  earthworks,  viz., 
that  the  single  tax  means  the  overthrow  of  the  institution  of 
private  property  in  land,  and  that  Henry  George  stood  for 


™^nj 


Mi 


M 


I 


Mil 


200         The  Principles  of  Natural  Taxation 


the  nationalization  of  land.  If  Henry  George  had  gone  so 
far  even  as  to  have  put  himself  under  the  dominance  of  a 
**  steering  committee  '*  chosen  from  his  enemies  the  professors, 
he  could  hardly  have  fared  worse  than  he  has  done  at  the 
hands  of  his  friends.  Listen  to  the  remarks  of  a  well-known 
disciple  at  a  Henry  George  Memorial  Meeting,  the  like  of 
which  subtly  do  incalculable  damage  to  any  great  cause, 
because  subject  to  misunderstanding: 

I  believe  we  are  in  a  revolutionary  movement.  If  I  did  not 
think  so  I  wouldn't  be  interested  in  it.  We  are  in  a  movement 
which  aims  to  let  the  poor  and  the  disinherited  own  the  earth, 
and  that  movement  is  sweeping  over  the  entire  civilized  world. 

If  it  be  granted,  however,  as  many  of  his  professed  follow- 
ers maintain,  that  Henry  George  did  really  believe  that  indi- 
vidual permanent  title,  tenure,  or  estate  in  land  is  wrong,  then 
when  Spencer  in  1882  recanted  the  first  six  sections  of  his 
original  Social  Statics  ( 1850),  the  championship  of  this  barren 
doctrine  was  left  practically  to  Henry  George  alone,  as  no 
other  economist  of  note  can  be  now  recalled  to  share  the 
honors  with  him. 

After  all,  have  we  not  haggled  long  enough  about  what 
Mr.  George  said  or  meant?  What  is  wanted  is  a  science  of 
obtaining  the  normal  revenue  of  a  community.  The  immense 
forward  strides  in  the  development  of  economic  science  in 
general  ought  to  make  it  possible  to  determine  the  truth  regard- 
ing his  system,  even  independent  of  what  he  said  forty  years 
ago.  //  this  reconciliation  is  not  possible,  why  not  discharge 
the  single  tax  at  once  of  this  incubus  and  handicap  of 
"common"  property  in  land,  wash  off  the  slate,  and  strike 
out  de  novo  for  a  science  of  natural  revenue,  if  needs  be,  sans 
Spencer,  sans  George,  sans  theories,  sans  speculations  ? 


CHAPTER  XIV 

The  Professors  and  the  Single  Tax 

THE  contribution  to  the  discussion  of  the  single  tax  by 
Professor  Alvin  S.  Johnson  of  Cornell  University  in  the 
Atlantic  Monthly  for  January,  19 14,  has  stimulated  general 
interest  as  to  the  attitude  of  professional  economists  on  this 
question.  Scores  of  professors  and  economists,  including  those 
who  have  attained  first  eminence,  as  well  as  those  growing  to 
distinction,  have  long  been  magnanimously  hospitable  to  the 
discussion  of  the  single  tax.  Granting  the  eccentricities  or 
aberrations  of  single  taxers,  such  as  the  Spencerian  contention 
that  private  property  in  the  land  itself  —  that  is,  for  men  to 
own  land  in  severalty  —  is  wrong,  and  the  economic  halluci- 
nation that  it  might  be  administratively  possible  to  take  in 
taxation  100  per  cent  or  all  of  economic  rent,  may  it  not  still 
be  a  fair  question  to  propound  to  the  professors  whether  they 
have  attempted  to  separate  the  essential  substance  of  the  single- 
tax  proposal  from  the  excrescences  that  have  accumulated 
about  it  and  to  consider  the  main  issue  solely  on  its  merits? 
Have  they  not  rather  shown  a  tendency  to  emphasize  and 
magnify  the  irrelevant  and  inconsequential  contentions  of  mis- 
guided advocates  of  the  singe  tax,  to  the  neglect  of  its  central 
thesis  ? 

The  first  question  is,  of  course,  as  to  the  real  importance 
of  the  single-tax  theory.  If  that  importance  is  sufficient,  should 
not  the  subject  find  place  in  the  laboratory  of  the  professor, 
where,  by  patient  and  careful  analysis,  qualitative  and  quan- 

201 


f V  ■  'I 

I'll):  ■ 


'8j: 


202         The  Principles  of  Natural  Taxation 

titativc,  dross  is  separated  from  gold?  Has  the  single  tax 
received  at  his  hands  discriminating  examination  and  eluci- 
dation? Can  it  be  claimed  that  the  professors  as  a  class  have 
so  studied  as  to  reach  an  accepted  scientific  analysis  and  under- 
standing? A  careful  examination  of  the  discussions  of  the 
single  tax  in  the  formal  treatises  on  political  economy  certainly 
fails  to  indicate  any  exhaustive  research  or  to  discover  any 
considerable  body  of  helpful,  constructive  criticism.  Instead 
of  recognizing  the  basic  principle  of  the  single  tax,  which  is 
admitted  even  by  the  severest  critics  to  be  sound,  and  then 
developing  this  fruitful  idea  by  eliminating  error  from  its 
presentation  and  determining  the  limits  of  its  economical  appli- 
cation, the  economists  have  seemingly  bent  their  energies 
toward  the  annihilation  of  the  whole  doctrine.  They  have 
elected  to  play  the  easy  role  of  hostile  critic,  instead  of  essay- 
ing the  more  difficult  one  of  guide,  philosopher,  and  friend. 
It  is,  however,  pleasant  to  record  that  to  this  general  statement 
there  are  many  notable  specific  exceptions. 

A  MISREPRESENTATION  OF  THE  ISSUE 

Professor  Johnson  prefaces  his  discussion  with  the  follow- 
ing astonishing  thesis : 

The  single-tax  movement  would,  therefore,  be  aptly  desig- 
nated as  a  propaganda  for  the  universal  confiscation  of  land. 
And  this  designation  the  single  taxers  themselves  would  accept 
without  reservation,  ....  as  a  step  in  the  direction  of  the 
confiscation  of  all  private  property. 

This  gratuitous  assertion  of  Professor  Johnson  may  be 
offset  by  the  following  declarations  of  the  two  authorities  on 
the  single  tax  most  widely  recognized,  Henry  George  and 
Thomas  G.  Shearman.     In  1892  George  declared:^ 
1 A  Perplexed  Philosopher,  p.  7a 


The  Professors  and  the  Single  Tax 


203 


I  am  not  even  a  land  nationalizationist,  as  the  English  and 
German  and  Australian  land  nationalizationists  well  know.  I 
have  never  advocated  the  taking  of  land  by  the  State  or  the 
holding  of  land  by  the  State,  further  than  needed  for  public  use ; 
still  less  the  working  of  land  by  the  State. 

Shearman  declared  also  in  1892:^ 

Shall  we  undertake  to  reclaim  literal  possession  of  "the  land 
for  the  people"?  Rightly  or  wrongly,  the  moral  sense  of  the 
people  would  revolt  at  such  a  proposition.  And  if  it  did  not, 
yet  the  immense  complications  involved  in  awarding  compensa- 
tion for  improvements  would  break  down  the  whole  project. 
It  is  not  worth  while  to  inquire  into  the  abstract  morality  of  an 
utterly  impracticable  scheme. 

I  have  never  before  encountered  Professor  Johnson's  con- 
ception of  the  doctrine  of  the  single  tax  from  one  having  any 
pretense  to  knowledge  of  the  subject.     Such  an  introduction 
to  the  discussion  is  strongly  suggestive  of  the  farmer  who 
put  green  goggles  on  his  horse  and  fed  hirni  on  shavings. 
"Confiscation'*  is  penalty  for  crime,  and  the  use  of  this  term 
in  connection  with  the  single  tax  involves  gross  distortion  and 
exaggeration.     The  sovereign  State  may  appropriate  private 
property  of  its  citizens  in  two  ways:    (i)   by  confiscation, 
(2)  by  taxation.     When  one  particular  man,  by  treason  or 
otherwise,  has  forfeited  his  rights  as  a  citizen,  the  lands  and 
houses  and  personalty  of  this  one  man  may  all  be  "  forfeit  to 
the  crown,"  while  the  validity  and  sanctity  of  9,999  other 
men's  rights  are  in  no  way  infringed.     This  is  confiscation. 
On  the  other  hand,  when  the  state,  in  order  to  obtain  the  rev- 
enue to  meet  the  expenses  of  government,  levies  tribute  upon 
its  10,000  citizens  impartially,  this  is  taxation.     Those  who 
make  this  charge  of  confiscation  forget  that  land  investment 

1  Natural  Taxation,  p.  215. 


204         The  Principles  of  Natural  Taxation 

today  IS  practically  free  of  tax,  and  that  the  burden  is  upon 
them  to  show  how  in  justice  this  anomalous  exemption  should 
continue. 

A  CORRECT  PRESENTATION  OF  THE  ISSUE 

Why  did  not  Professor  Johnson  find  space  to  say  that  the 
single  tax  seeks  to  embody  the  principle  of  the  application  of 
common  property  to  common  uses,  "the  taking  by  the  com- 
munity, for  the  use  of  the  community,  of  that  value  which  is 
the  creation  of  the  community" — the  justice  of  which  will, 
I  venture  to  say,  be  acknowledged  by  nine  out  of  ten  of  the 
economists  of  the  world  ?  Why  did  he  not  say  that  the  single 
taxer  hangs  his  hope  upon  the  fact  that,  however  heavy  the 
tax  upon  land,  it  can  be  no  burden  upon  the  worker,  and 
cannot  affect  the  use  value  of  land  —  that  an  "old"  tax,  i.e., 
a  tax  which  was  upon  the  land  when  it  passed  to  the  present 
owner,  is  not  now  a  burden  upon  him  —  that  only  a  future 
"new"  tax  would  be  a  net  deduction  from  the  rent  of  his 
land  —  that  a  landowner  per  se  is  not  a  "parasite"  except  to 
the  extent  that  he  fails  in  his  landlord-duty  to  improve  his 
land — to  the  extent  only  that  he  stands  between  man  and  the 
land,  and  becomes  a  speculator,  a  cornerer  of  a  necessary 
of  life? 

SPOLIATION  OF  THE  MIDDLE  CLASS 

Again,  Professor  Johnson  represents  the  single  tax  as 
"essentially  a  device  for  the  spoliation  of  the  middle  class." 
When  a  man  buys  land  in  Regina  for  $5,000  and  sells  it  ten 
years  later  for  $200,000,  who  is  it,  will  Professor  Johnson 
tell  us,  that  is  saddled  with  the  maintenance  of  this  $195,000 
of  "water"  if  not  the  "great  middle  class"  of  Regina,  the 
class  whose  improvements,  of  all  others  the  world  over,  gener- 


The  Professors  and  the  Single  Tax         205 

ally  exceed  the  site  value  of  their  land,  and  to  whom,  there- 
fore, the  remission  of  taxes  on  their  improvements  would  be 
tantamount  to  compensation  rather  than  confiscation,  since 
their  tax  burden  would  be  proportionately  less.  Or,  again,  to 
pile  Pelion  upon  Ossa,  if  the  land  values  of  the  city  of  Seattle, 
Washington,  which  in  1901  were  $71,000,000,  are  ten  years 
later  (in  191 1)  $281,000,000,  who  is  to  pay  the  taxes  even- 
tually necessary  to  maintain  this  added  $211,000,000  specu- 
lative value,  if  it  is  not  the  middle  class  —  the  occupiers,  users, 
and  improvers  of  the  land  of  Seattle?  One  advantage  of  the 
single  tax  to  the  "middle-class"  man,  if  he  is  a  would-be 
farmer,  is  that  so  far  as  an  increased  tax  on  the  land  decreases 
its  selling  price  he  will  require  less  ready  capital  for  the  pur- 
chase of  a  farm.  It  will  not,  however,  alter  the  annual  cost 
to  him  for  its  use;  this  will  always  be  the  sum  of  the  interest 
on  his  investment  plus  his  land  tax.  If  his  purchase  price  is 
lower,  his  tax  will  be  higher,  and  vice  versa.  Professor  John- 
son has  overlooked  the  fact  that  one-third  of  the  farmers  are 
tenants  and  will  look  to  their  landlords  to  pay  the  land  tax. 
As  to  the  two-thirds  who  are  owners  and  cultivators,  the 
general  remedy  will  apply  that,  however  adverse  the  effect 
upon  any  particular  class  of  landowners,  their  alleged  injury 
cannot  obtain  beyond  two  or  three  generations,  at  farthest. 
They  can  meantime  have  no  ground  of  complaint  beyond  hav- 
ing their  investment,  now  free  of  tax,  subjected  to  the  same 
rate  as  buildings  that  are  upon  the  land. 

SOURCE  OF  PRESENT  COLOSSAL  INDUSTRIALISM 

According  to  Professor  Johnson,  "It  was  the  unearned 
increment  which  opened  the  West  and  laid  the  basis  for  our 
present  colossal  industrialism,  ....  has  moved  hundreds  of 
thousands  from  our  Middle  West  to  the  Canadian  Northwest." 


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206  The  Principles  of  Natural  Taxation 

It  was,  he  declares,  the  unearned  increment,  rather  than  the 
hunger  and  wanderlust  of  millions,  that  created  a  vast  surplus 
of  food  products.  It  is  the  general  impression  that  the  hunger 
of  the  millions  developed  their  food  supply  along  the  line  of 
least  resistance.  Is  it  not  free  land  that  for  a  hundred  years 
has  promoted  the  westward  tide?  Now  that  this  land  is  no 
longer  free  for  use,  but  monopolized  out  of  use,  the  "Westward 
Ho!"  man  has  no  one  to  defend  him  from  the  speculator  in 
the  increment  who  wants  to  sell  him  his  land  at  a  "  watered  " 
price.  So  he  falls  in  with  the  current  to  Canada,  where  a 
government  shows  interest  enough  to  help  pay  his  traveling 
expenses  from  some  distant  country,  gives  him  temporary  free 
support,  helps  him  to  settle,  and  lends  him  credit  with  which 
to  start.  The  single  tax  would  offer  an  additional  inducement 
in  the  fact  that  the  best  lands  would  be  open  to  him  at  the 
lowest  instead  of  the  highest  price.  It  may  well  be  asked, 
Who  gets  the  principal  benefit  of  this  Northwest  movement? 
Is  it  the  "  hundreds  of  thousands "  moving  away  from  the 
"  Middle  West "  ?  Is  it  the  depopulated  district,  or  is  it  the 
land  speculator  who  intercepts  a  very  considerable  portion  of 
this  benefit  to  the  settler  by  anticipating  and  appropriating  the 
land  increment.  Of  this  increment  it  may  be  said  that  it  is 
"water"  in  precisely  the  same  sense  in  which  five  hundred 
million  of  steel  stock  is  water.  It  is  the  capitalization  of  the 
heaviest  tribute  that  the  steel  traffic  or  the  land  traffic  will 
bear — a  dividend  without  an  investment. 

It  is  delusive  to  say  that  in  any  true  sense  the  speculators 
have  created  these  industries  and  values.  They  simply  banked 
upon  the  general  recognition  that  people  must  have  land  as 
they  must  have  grain,  and  they  cornered  the  land  as  grain  is 
cornered,  and  thus  profited  at  the  expense  of  the  great  "  middle 
class,"  the  workers  of  the  world.     Thus  it  is  by  no  means 


The  Professors  and  the  Single  Tax  207 

clear  that  the  "  unearned  increment "  has  not  been  more  of  a 
bane  than  a  blessing  in  the  development  of  this  country.  It  is 
the  artificial  prominence  of  the  centrifugal  spreading-out 
influence,  with  its  unsystematic  wasteful  and  prodigal  treat- 
ment of  the  land,  that  has  made  the  United  States  a  byword 

among  the  nations. 

The  Sage  of  Concord  ^  was  wise  when  he  said  of  the  rush 
to  get  rich:  "The  luck  of  one  is  the  hope  of  thousands,  and 
the  bribe  acts  like  the  neighborhood  of  a  gold  mine  to  im- 
poverish the  farm,  the  school,  the  house,  the  church,  and  the 
very  body  and  feature  of  man."  What  did  these  words  betoken 
if  not  a  clear  intellectual  epitome  of  the  whole  land  question, 
pronounced  nearly  four-score  years  ago,  before  the  hegira  of 
the  forty-niners,  and  early  in  the  great  land  movement  to  the 
West? 

THE  PROFESSORS  ON  PARADE 

The  foregoing  easy  disposal  of  the  single  tax  by  Professor 
Johnson  tempts  one  to  turn  attention  to  the  treatment  of 
the  subject  by  standard  economic  writers.  The  writings  of 
eleven  authorities  —  Bullock,  Daniels,  Davenport,  Ely,  Fetter, 
Fisher,  Hadley,  Plehn,  Seager,  Seligman,  and  Taussig— have 
been  examined  and  excerpts  made  to  exhibit  their  views  on  the 
single  tax.  Thus  an  occasion  is  presented  for  the  single  taxer 
to  make  his  complaints  and  find  what  fault  he  can  with  those 
who  hold  the  keys  to  the  kingdom  of  economics. 

CONFISCATION,    NATIONALIZATION,   OWNERSHIP 

In  reading  these  treatises  one  cannot  escape  being  impressed 

by  the  near  unanimity — nine  to  two — with  which  the  writers 

confidently  dispose  of  the  pretensions  of  the  George  plan  by 

'Ralph  Waldo  Emerson  in  address  "Nature**  at  Waterville  College, 
Maine,  August  ii,  1841. 


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208         The  Principles  of  Natural  Taxation 

assuring  themselves  that  he  aimed  at  the  upsetting  of  a  cher- 
ished institution,  the  destruction  of  property  rights,  thus  hope- 
lessly prejudicing  the  case  even  before  a  jury  has  been  im- 
paneled. This  method  of  treatment  is  vehemently  protested 
as  an  unscientific  mode  of  procedure.  With  the  deadly  assump- 
tion of  the  intended  abolition  of  "property  in  land"  there 
follows  easy  assent  to  the  consequent  charge  of  nationalization 
of  land  on  the  high  single-tax  road  to  Professor  Johnson's 
"confiscation  of  all  private  property."  We  believe  it  to  be  a 
well-grounded  complaint  that  the  treatment  of  the  "books" 
is  sometimes  superficial,  not  always  fair,  and  not  always  abreast 
of  the  times. 

Professor  Charles  J.  Bullock  says : 

The  proposal  to  confiscate  existing  rents  must  be  rejected  as 
unjust.  (E.  328.)  ^  It  is  evident  that  such  a  plan  is  equivalent 
to  national  ownership,  or  nationalization  of  land.  (1. 495.)  .  .  .  . 
Mr.  George's  plan  of  confiscating  the  value  of  land  without  com- 
pensating present  owners  does  not  appeal  to  the  conscience  of 
the  average  American  as  just.  Society  has  allowed  private  land 
ownership  in  this  country  ever  since  English  settlement.  The 
present  owners  have  invested  in  land  in  good  faith.  If  it  should 
be  decided  inexpedient  to  continue  our  present  system,  the  burden 
of  the  change  should  not  be  thrown  upon  the  single  class  of  land- 
owners. (1. 500.) 

Professor  Richard  T.  Ely  says  : 

Mr.  George  proposes  to  take  all  the  unearned  increment,  past 
and  present,  and  that  whether  the  present  owners  have  been 
encouraged  to  believe  that  they  might  be  permitted  to  appropriate 
the  whole  unearned  increment  or  not.  Herein  lies  the  essential 
injustice  of  Mr.  George's  scheme  ....  (p.  596).  Mr.  George 
not  only  proposes  to  confiscate  all  economic  rent  without  com- 

*  These  and  subsequent  page  references  are  from  Bullock's  Elements 
of  Economics  and  Introduction  to  the  Study  of  Economics;  Ely's  Outline 
^f  ^^o^omics;  Hadley's  Economics;  Seager's  Introduction  to  Economics. 
and  Seligman's  Essays  in  Taxation. 


The  Professors  and  the  Single  Tax 


209 


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pensation,  and  to  abolish  all  other  forms  of  taxation,  but  the 
assertion  is  made  in  explanation  and  justification  of  the  policy 
that  it  will  abolish  poverty.  ....  No  abstract  reasoning,  based 
on  "  natural  rights,"  will  persuade  a  modern  nation  to  so  radical  a 
step  (p.  597)- 

President  Arthur  T.  Hadley  says : 

They  propose  either  to  make  the  land  common  property  and 
let  this  gain  accrue  to  the  public  (land  nationalization),  or  to 
leave  the  title  in  private  hands  as  at  present,  but  tax  economic 
rent  to  its  full  amount  in  lieu  of  all  other  taxes,  the  single-tax 
theory  (pp.  47O-70- 

Professor  Henry  R.  Seager  says : 

Such  policies  amount  to  confiscation  and  can  only  be  justified 
on  the  ground  that  they  are  absolutely  essential  to  general  well- 
being  (p.  522) To  deprive  them  of  their  lands  or  what 

amounts  to  the  same  thing,  of  the  income  which  these  lands  attord, 
would  be  to  commit  a  monstrous  piece  of  injustice  (p.  §22). 
....  A  State  which  would  thus  overturn  an  established  insti- 
tution, and  confiscate  by  wholesale  the  property  of  its  citizens, 
would  lose  the  confidence  of  those  citizens  and  be  reduced  to  a 
condition  of  anarchy  bordering  on  civil  war  (p.  523)-  •  •  •  • 
Such  a  tax  involves  the  confiscation  of  property  (p.  585). 

Professor  E.  R.  A.  Seligman  says : 

When  the  change  advocated  is  a  direct  reversal  of  the  progress 
of  centuries,  and  a  reversion  to  primitive  conditions  away  from 
which  all  history  has  traveled,  the  necessity  for  its  absolute  proof 
becomes  far  stronger.  The  nationalization  of  land  is  a  demand 
which,  in  order  to  win  general  acceptance,  must  be  based  on 
theories  independent  of  the  doctrine  of  natural  rights. 

In  their  opposition  to  the  single  tax,  the  professors  appear 
substantially  to  assume  that  Henry  George  and  the  single  tax 
are  synonymous  and  coterminous,  and  that  when  they  have 
overthrown  the  "  temple  "  of  their  own  interpretation  of  Henry 


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210         The  Principles  of  Natural  Taxation 

George  the  single  tax  goes  to  ruin  with  it.    Such  a  course  is 
hardly  fair  because  of  the  fact  that  of  the  "old"  believers  in 
Henry  George  a  respectable  minority  do  not  at  all  follow  the 
professors  in  their  interpretation.    Mr.  Thomas  G.  Shearman, 
who  made  a  scientific  exposition  of  the  single  tax  which  no 
one  claims  to  have  successfully  attacked,  has  not  even  been 
invoked  as  a  commentator,  and  a  whole  lot  of  didactic  matter 
in  extension  of  Henry  George's  formula  —  matter  that  has 
received  high  academic  indorsement  as  sound  educational  mate- 
rial—escapes the  notice  of  should-be-careful  economic  guides. 
These  noted  teachers  should  grasp  the  fact  that  they  are,  so 
to  speak,  bellwethers  of  a  great  and  perennial  flock  of  citizens 
in  the  making,  even  as  Solomon  of  old  doubtless  had  grasped 
the  profound  sociological  truth  that  when  the  king  takes  snuff 
all  the  people  sneeze,  a  perception  which  presumably  accounted 
in  no  small  degree  for  the  temperance  and  wisdom  of  his  habits. 
The  professors  have  a  right  to  believe,  if  they  choose,  that 
Henry  George  thought  the  application  of  his  remedy  would 
result  eventually  in  the  abolition  of  the  institution  of  private 
property  in  land.     On  the  other  hand,  the  fact  that  a  body 
of   original   enthusiasts   persistently   shout   this   proposition 
should  not  mislead  the  professors  to  mistake  noise  for  num- 
bers, and  thus  implicate  a  vastly  more  numerous  body  of 
logical  and  consistent  believers  in  the  single  tax  who  stoutly 
defend  private  proprietorship.     Even  though  Henry  George 
said  "  it  is  not  necessary  to  confiscate  land,  it  is  only  neces- 
sary to  confiscate  rent,"  would  it  not  be  a  scientific  procedure 
to  correct  such  a  false  impression,  from  whatever  source,  as 
that  gradual  taxation  is  criminal  forfeiture,  confiscation  —  a 
term  that,  wrested  from  its  proper  context,  and  in  a  distorted 
sense,  has  been  worked  threadbare  in  a  foreign  service?    A 
worker  in  the  Oregon  field  expresses  full  appreciation  of  the 


The  Professors  and  the  Single  Tax         211 

baleful  effects  of  this  error  when  he  says  that  the  particular 
parts  of  Henry  George's  teachings  which  are  construed  to 
mean  the  destruction  of  the  institution  of  private  property  in 
land  "  were  used  with  a  terrific  effect "  in  the  single-tax  cam- 
paign of  two  years  ago. 

Whether  or  not  Henry  George  meant  to  assert  that  the 
taking  of  any  part  or  all  of  ground  rent  in  taxation  would 
destroy  individual  ownership  in  severalty  of  the  land  itself 
is  yet  a  debatable  question.  In  any  event,  his  assertion  cannot 
make  a  right  out  of  a  wrong.  The  party  of  the  other  part 
wonders  why  the  professors  should  be  strenuous  to  profit  by 
a  verbal  inaccuracy  of  Henry  George's  instead  of  bringing  the 
economic  question  involved  before  the  bar  of  their  own 
enlightened  judgment. 

The  edge  of  the  professorial  criticism  is  dulled  by  the  fact 
that  it  is  so  largely  directed  not  to  a  scientific  but  to  an  un- 
scientific statement  of  the  single  tax.  It  is  not  even  directed 
to  the  plain  scientific  form  in  which  George  put  it,  but  to  a 
muddled  by-interpretation,  the  speciousness  of  which  ought 
not  to  impose  upon  university  men.  The  provoking  part  of 
it  is  that  in  aid  of  a  fairer  definition  of  the  situation  Mr.  George 
himself  was  not  called  in  to  cut  his  own  Gordian  knot.  It  was 
Mr.  George's  special  achievement  that,  while  distinctly  con- 
ceding the  legal  ownership,  individual  tenure  of  or  estate  in 
the  land  itself,  he  corrected  and  advanced  the  issue  from  the 
common  right  to  the  use  of  the  earth  to  the  joint  right  to  the 
enjoyment  of  rent,  making  clear  the  fact  that  land  is  one  thing 
and  the  rent  of  land  another  and  entirely  different  thing, 
and  that  to  take  in  taxation  the  rent  of  land  it  is  not  necessary 
to  take  the  land  itself;  yet  we  are  nonchalantly  told  by  leading 
professors  that,  anyway,  we  are  aiming  only  at  an  academic 
distinction. 


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212         The  Principles  of  Natural  Taxation 

The  truth  or  error  of  the  single  tax  does  not  depend  upon 
the  infallibility  of  Henry  George  or  even  upon  his  elucidation 
of  it.  It  is  difficult  to  see  why  professors  should  have  been 
blind  to  the  scientific  principle  involved  simply  because  they 
were  not  ready  to  follow  Henry  George  in  all  his  conclusions. 
The  science  of  taxation  has  been  better  presented  by  another 
man  who  was  just  as  devoted  a  philanthropist  as  Henry  George. 
The  professors  have  had  before  them  for  twenty  years  the 
work  of  Thomas  G.  Shearman  on  Natural  Taxation.  It  is 
curious  that  while  Henry  George  has  been  exposed  to  all 
manner  of  criticism,  I  have  yet  to  meet  an  attempted  refutation 
of  a  single  principle  as  expounded  by  Mr.  Shearman,  or  to 
meet  the  man  who  wanted  to  refute  them. 

The  single  taxer  wonders  how  the  academic  treatment  of 
his  pet  thesis  can  be  reckoned  adequate  when  in  seven  out 
of  eleven  volumes  of  political  economy  under  consideration 
the  name  of  Thomas  G.  Shearman  is  not  indexed,  while  the 
other  four  have  half  a  dozen  references,  not  one  of  which 
citations  or  references  deals  with  the  principles  of  the  single 
tax. 

It  is  well  worth  while  to  clear  up  this  confusion  as  to 
common  property  in  land.  Henry  George  presented  for  his 
remedy  a  perfect  formula ;  ^  nevertheless,  he  continued  ambig- 
uously to  reiterate  the  recanted  error  of  Spencer  condemning 
specific  ownership  of  land,  but  he  did  this  in  such  relation 
to  his  own  record,  and  in  such  context,  as  to  justify  the 
general  opinion  that  his  attack  was  aimed  not  at  ownership 
of  land,  but  at  ownership  of  rent.  Thirdly,  in  this  Spencerian 
phase,  not  only  does  he  lack  the  support  of  any  other  known 
economist,  but  no  single-tax  writer  before  or  after  him  appears 
to  have  been  impressed  with  such  a  view.  If  progress  of  events 
^Progress  and  Poverty,  Book  viii,  chap.  ii. 


The  Professors  and  the  Single  Tax         213 

and  of  the  science  of  taxation  should  ever  cause  the  economists 
to  expunge  from  their  records  this  ex  parte  verdict  upon  a 
mistaken  and  factitious  issue,  the  case  against  normal  revenue 
methods  would  be  greatly  reduced  in  volume. 

TAXATION  OF  FUTURE  INCREMENT 

The  proposal  to  take  in  taxation  a  substantial  part  of  the 
future  increment  of  land  value,  to  which  ready  and  wide  assent 
has  been  given,  is  discussed  by  only  two  of  the  eleven  writers 
under  scrutiny. 

Professor  Taussig  says :  ^ 

A  different  proposal  is  that  to  appropriate,  not  the  whole  of 
the  unearned  increment,  but  the  future  accretions.  ....  Take 
for  society  at  large  the  increase  of  rents  that  will  arise  hereafter. 
There  can  be  no  objections  in  principle  to  this  proposal.  •  •  •  • 
The  question  is  different  as  regards  the  rise  in  rent  that  is  still 

to  come.    There  is  no  vested  right  in  the  indefinite  future 

With  the  rapid  growth  of  modern  cities  and  the  unmistakable 
swelling  of  site  rents,  a  reservation  of  the  community's  rights 
with  respect  to  urban  land  has  met  with  steadily  increasing  recog- 
nition. . 

The  form  in  which  this  right  is  most  likely  to  be  asserted  is 
that  of  a  special  tax  on  the  newly  accruing  increase  in  site 
values.  In  strict  theory,  the  whole  of  this  increase  might  be 
taken  through  taxation. 

Professor  Bullock  says : 

If  the  proposal  to  confiscate  existing  rents  must  be  rejected 
as  unjust,  the  same  criticism  cannot  be  directed  at  projects  for 
gradually  appropriating  to  public  purposes  the  future  increment 
of  land  values.  (E.328.)  ....  To  adjust  municipal  taxation  in 
such  a  manner  as  to  intercept  a  considerable  part  of  the  future 
unearned  increment  from  land  would  be  a  safe  and  probably  a 

desirable  policy It  would,  moreover,  be  in  line  with  some 

of  the  existing  tendencies  in  municipal  finance.  (E.329.)  .  .  .  . 

1  Taussig,  F.  W.,  Principles  of  Economics,  Vol.  n,  pp.  75  and  102. 


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214         The  Principles  of  Natural  Taxation 

But  any  income  acquired  by  paying  its  capitalized  value  is  not  to 
be  considered  unearned.  (E.  291.)  .  .  .  .  So  far  as  urban  lands 
are  concerned,  there  can  be  little  doubt  that  it  is  the  part  of 
wisdom  for  municipalities  to  seize  upon  a  source  of  revenue  that 
is  brought  into  existence  by  urban  growth  and  to  a  large  extent 
maintained  by  constant  public  expenditure.  (E.  330.)  ....  We 
must  admit  that  a  large  unearned  increment  of  ground  rents  is 
secured  by  the  owners  of  specially  favored  lots.  No  one  would 
question  the  justice  of  imposing  a  part  of  the  burden  of  taxation 
upon  such  an  income.  (1. 499.) 

At  this  point  a  generous  critic  finds  himself  confronted 
by  a  painful  sense  of  disproportion  between  topic  and  treat- 
ment. Taxation  of  the  future  increment  is  a  recent  develop- 
ment in  legislation,  though  it  is  not  new  to  discussion.  It 
seems  adapted  to  circumvent  many  or  most  of  the  objections 
raised  against  the  additional  taxation  of  present  rent,  and  for 
that  reason  it  appears  to  command  a  recognition  peculiar  to 
itself.  It  seems  to  promise  In  some  cases  the  possibility  of  a 
common  ground  for  initial  proceedings,  yet  only  two  out  of 
our  eleven  writers  give  material  attention  to  this  proposition, 
which  has  received  a  certain  recognition  in  both  Great  Britain^ 
and  Germany,  and  these  two  writers  compress  the  treatment 
into  extremely  small  compass.  One  is  tempted  to  ask  of  the 
professors  bluntly:  "Are  you  really  the  leaders,  the  pioneers, 
the  inventors^  the  Edisons,  and  the  Marconis  of  the  world's 
economic  thought  ?  "    If  the  taxation  of  economic  rent  is  sound 

'Rev.  J.  Kelleher,  teacher  of  St.  John's  College,  Waterford,  Ireland, 
priest  of  a  church  which  lays  no  claim  to  specific  economic  leading,  has 
almost  stolen  the  march  on  his  American  brethren  when  he  says  in  the 
Irish  Theological  Quarterly,  January,  1914,  that :  "  I  have  already  labored 
to  show  that  the  present  landowners  should  not  be  permitted  to  appropri- 
ate any  of  the  natural  increase  in  land  values  beyond  what  is  represented 

in  the  present  market  value  of  their  lands If  the  entire  increase  is 

due  to  the  public,  then  surely  there  ought  to  be  no  objection  against  taking 
a  bare  10  per  cent  or  20  per  cent  of  it.  One-fifth  or  even  one-tenth  of  a 
loaf  is  better  than  no  bread,  ....  although  the  whole  of  the  natural  in- 


The  Professors  and  the  Single  Tax 


215 


in  principle,  why  should  it  receive  such  scant  attention  from 
our  chosen  authorities  ? 

MONOPOLY  AND  PRIVILEGE 

Perhaps  no  single  term  has  insinuated  itself  more  into 
popular  apprehension  during  the  last  decade  than  the  term 
"privilege.''  The  press,  legislators,  statesmen,  and  presiden- 
tial candidates  have  expounded  and  exploited  it  copiously. 
Following  this  initiative,  single  taxers  have  taken  great  pains 
to  formulate  and  define  "  privilege  "  and  to  put  its  destructive 
features  in  a  scientific  setting.  Naturally  the  absence  even  of 
the  term  "privilege"  in  the  indexes  to  the  economic  books 
under  consideration  occasions  momentary  surprise. 

Privilege  is  believed  to  offer  great  advantage  as  a  vehicle 
for  economic  teaching  and  discussion,  as  perhaps  more  inclu- 
sive though  less  specific  than  monopoly,  the  established 
standard  term. 

THE  THREE  POSTULATES  OF  THE  SINGLE  TAX 

It  may  not  seem  a  gracious  act  in  us  to  file  claims  against 
the  college  and  university  commissaries  for  an  inadvertent 
short  measure  here  and  there  in  dealing  out  their  rich  stores 
of  learning,  but  it  has  to  be  performed.  Here  is  the  one 
closing  specification.    In  single-tax  propaganda  much  time  has 

crease  in  land  values  should  belong  properly  to  the  public,  and  therefore  to 
take  10  per  cent  or  20  per  cent  of  it  from  the  present  landowners  would 

be  no  injustice "    Fr.  Kelleher  is^  the  author  of  a"  .^^J^^^f^^^^^'^' 

Private  Ownership,  Its  Basis  and  Equitable  Condition,  published  by  M.  H. 
Gill  &  Son  Ltd.,  Dublin,  Ireland.         ,  „      .  .     r  r,        t?a    ..a 

The  foregoing  declaration  and  the  following  statement  of  Rev.  Edward 
McGlynn,  declared  by  due  authority  in  1892,  to  contain  nothing  contrary 
to  Catholic  teaching,  make  a  liberal  contribution  to  the  economic  solution 
"  To  permit  any  portion  of  this  public  property  to  go  into  private  pockets 
without  a  perfect  equivalent  being  paid  into  the  public  treasury,  would  be 
an  injustice  to  the  community.  Therefore  the  whole  rental  fund  should  be 
appropriated  to  common  or  public  uses." 


•i 


216         The  Principles  of  Natural  Taxation 

been  given  to  explaining  the  triple  alliance  of  three  principles: 
(i)  the  social  origin  of  ground  rent;  (2)  the  non-shiftability 
of  a  land  tax;  (3)  the  ultimate  burdenlessness  of  a  land  tax. 
The  second  and  third  of  these  have  received  from  the  au- 
thorities full  description  and  almost  universal  indorsement. 
But  antecedent  to  these  is  the  first  principle :  What  is  it  that 
gives  rise  to  economic  rent,  the  value  of  land?  On  this  point 
the  question  arises :  Is  the  teacher  giving  to  his  pupils  all  there 
is  to  be  had  ?  In  an  enumeration  of  the  causes  of  ground  rent, 
population  is  usually  the  one  first  named.  But  a  passive  popu- 
lation gives  little  value  to  land;  it  is  rather  the  activities 
consequent  upon  the  character  of  population  that  create  the 
value.     The  topic  invites  easy  and  profitable  amplification. 

The  more  one  realizes  to  what  a  fatuous  extent  Henry 
George  men  are  themselves  responsible  for  the  perversion  of 
the  main  contention  of  their  chief,  the  more  unfortunate  does 
it  appear  that  unwise  methods  of  one  kind  and  another  should 
have  been  forced  into  the  issue  and  retarded  the  reform  sub- 
stantially for  a  generation,  thus  lessening  the  tremendous 
original  impulse  of  Progress  and  Poverty.  That  impulse  was 
great  enough  under  wise  methods  to  have  brought  the  world  of 
today  to  a  full  recognition  that  taxation  has  a  rightful  domicile 
in  the  domain  of  science. 

In  conclusion,  it  is  hoped  that  the  facts  which  have  been 
pointed  out  will  suffice  to  induce  economists,  to  whom  the 
people  look  for  light  and  leading,  to  re-examine  the  whole 
subject  of  the  so-called  single  tax,  not  in  the  light  of  any  fore- 
conception  such  as  might  result  from  certain  ohiter  dicta  of 
Henry  George,  but  by  independent  investigation  based  on 
authoritative  definitions  and  presentation  of  single-tax  philoso- 
phy, such  as  is  found,  for  example,  in  Shearman's  Natural 
Taxation,     The  results  of  such  investigation  conducted  by 


The  Professors  and  the  Single  Tax  217 

trained  and  unbiased  economists,  uninfluenced  by  the  opinions 
or  conflicting  statements  of  previous  writers,  would  be  of  the 
highest  service  to  all  who  are  interested  in  the  present  des- 
perate need  of  the  world,  namely,  a  proper  shaping  of  revenue 
methods,  whether  of  town,  city,  state,  or  nation. 

This,  then,  is  our  earnest  plea  for  a  new  trial  with  a  change 
of  venue,  with  reasonable  assurance  of  a  fair  verdict  upon 
the  single  tax  as  known  to  its  f  rietjds. 

It  is  a  parade  review  of  the  "  human  "  professors  face  to 
face,  allowing  us  the  satisfaction  of  telling  not  only  how  much 
we  think  of  them,  but  what  we  don't  think  of  them. 

It  is  the  disavowal  of  an  aim  at  the  wholesale  conversion 
of  the  world  to  a  following  of  Henry  George  and  his  writings 
in  toto. 

It  contains  the  needful  reiteration  of  the  fact  that  Herbert 
Spencer  was  wrong  when  he  said  that  "  private  ownership 
in  land  is  not  permissible,"  but  was  right  in  taking  back  out 
of  thirteen  sections  of  chap,  ix  of  Social  Statics'^  the  six  only 
which  related  solely  to  this  point ;  and  that  Henry  George  was 
right  when  he  said  that  "  the  joint  or  common  right "  of  men 
is  not  to  the  land  but  to  the  rent  of  land. 

With  apologies  for  these  works,  as  it  were,  of  supereroga- 
tion, we  rest  from  our  labors  and  pray  for  the  fruition  of  a 
great  hope. 

^A  Perplexed  Philosopher,  chap.  i. 


ill 

i  1 


CHAPTER  XV 

A  Catechism  of  Natural  Taxation 

QOME  years  ago,  when  president  of  the  Massachusetts 
^  Single  Tax  League,  I  started  a  correspondence  and  series 
of  conferences  with  a  large  number  of  students  of  political 
economy,  including  more  than  a  hundred  professors  in  the 
leading  colleges  and  universities  of  the  country.  The  pur- 
pose was  to  ascertain  whether  it  might  be  possible  to  secure 
agreement  of  recognized  authorities  concerning  the  funda- 
mental economic  principles  on  which  the  science  of  taxation 
must  rest.  The  project  met  with  such  cordial  approval  at 
the  hands  of  the  economists,  and  proved  so  interesting  and 
profitable  that  it  finally  resulted  in  a  round-table  conference 
at  the  annual  meeting  of  the  American  Economic  Association 
held  at  Madison,  Wisconsin,  in  December,  1907.^  The  final 
canvass  of  opinions  showed  an  overwhelmingly  majority 
agreed  upon  the  three  propositions  stated  in  the  following 
Catechism,  No.  39.^ 

"  Largely  out  of  the  correspondence  elicited  by  the  A  B  C 
of  Taxation  this  Single-Tax  Catechism  has  grown."  As  de- 
scribed by  an  economist  not  in  sympathy  with  the  single  tax: 

It  simplifies  the  method  of  treatment,  supplies  needed  defini- 
tions and  explanations,  and  meets  the  objections  naturally  raised 
by  honest  seekers  after  the  truth.  In  fundamental  doctrine  no 
change  has  been  required  either  in  general  principles  or  their 

1  See  Proceedings  of  the  Twentieth  Annual  Meeting  of  the  American  Eco- 
nomic Association,  1907,  pp.  117-29;  also  The  A  B  C  of  Taxation,  pp.  187-90. 

2  Quoted  from  an  introduction  to  the  edition  of  the  Catechism  which 
was  published  in  the  National  Magazine  for  November,  1912. 

218 


A  Catechism  of  Natural  Taxation 


219 


practical  application.  Thirteen  editions  of  the  Catechism  have 
been  privately  printed  and  circulated.  They  have  given  oppor- 
tunity to  make  such  changes  as  have  seemed  desirable  after 
considering  the  hundreds  of  criticisms  and  suggestions  received 
from  critics,  friendly  as  well  as  otherwise  disposed.  From 
correspondents  and  other  friends,  indeed,  so  great  assistance  has 
been  derived  that  the  Catechism  has  really  become  the  joint 
product  of  scores  of  collaborators. 


CATECHISM  ^ 

1.  Q,   What  is  a  tax? 

^.  K  tax  is  a  compulsory  contribution  of  individual 
product  or  the  value  of  such  product  toward  the  needs 
of  government. 

2.  Q.   What  is  meant  by  the  single  tax? 

A.  The  payment  of  all  public  expenses  from  economic 
rent,  the  normal  revenue,  thus  eventually  abolishing 
all  taxes. 

3.  Q.   What  is  meant  by  economic  rent? 

A,  Gross  ground  rent — the  annual  site  value  of  land — 
what  land,  including  any  quality  or  content  of  the  land 
itself,  is  worth  annually  for  use — what  the  land  does 
or  would  command  for  use  per  annum  if  offered  in 
open  market  —  the  annual  value  of  the  exclusive  use 
and  control  of  a  given  area  of  land,  involving  the  en- 
joyment of  those  "rights  and  privileges  thereto  per- 
taining "  which  are  stipulated  in  every  title  deed,  and 
which,  enumerated  specifically,  are  as  follows:  right 
and  ease  of  access  to  water,  health  inspection,  sewer- 
age, fire  protection,  police,  schools,  libraries,  museums, 
parks,  playgrounds,  steam  and  electric  railway  service, 
*  Edition  of  1916-17,  fifteenth  revision. 


^'il 


15: 


I 


220         The  Principles  of  Natural  Taxation 

gas  and  electric  lighting,  telegraph  and  telephone  serv- 
ice, subways,  ferries,  churches,  public  schools,  private 
schools,  colleges,  universities,  public  buildings  —  utili- 
ties which  depend  for  their  efficiency  and  economy  on 
the  character  of  the  government;  which  collectively 
constitute  the  economic  and  social  advantages  of  the 
land  which  are  due  to  the  presence  and  activity  of 
population,  and  are  inseparable  therefrom,  including 
the  benefit  of  proximity  to,  and  command  of,  facilities 
for  commerce  and  communication  with  the  world  —  an 
artificial  value  created  primarily  through  public  ex- 
penditure of  taxes.  For  the  sake  of  brevity,  the  sub- 
stance of  this  definition  may  be  conveniently  expressed 
as  the  value  of  "  proximity.'*  It  is  ordinarily  measured 
by  interest  on  investment  plus  taxes. 

4.  Q.   What  is  the  ethical  basis  of  the  single  tax? 

A.  The  common  right  of  all  citizens  to  profit  by  site 
values  of  land  which  are  a  creation  of  the  community. 

5.  Q.   What  is  meant  by  equal  right  to  land  ? 

A,  The  right  of  access  upon  equal  terms — preference  to 
be  secured  only  upon  payment  of  a  premium  that  will 
extinguish  the  equal  rights  of  all  other  men. 

6.  Q.   What  is  meant  by  a  joint  or  common  right  to  land  ? 

A,  The  joint  or  common  right  to  the  rent  of  land — a 
right  such  as  heirs-at-law  have  to  share  the  income  of 
or  rent  of  an  estate. 

7.  Q.   What  is  meant  by  land  value? 

A,  Its  site  value  —  its  selling  or  market  value — its  net 
value  to  the  purchaser  —  the  capitalization  of  its  net 


A  Catechism  of  Natural  Taxation 


221 


rent — the  value  supposed  to  be  adopted  by  the  asses- 
sors as  the  basis  of  taxation. 

8.  Q.    How  about  fertility  value? 

A.  On  the  surface  of  the  globe  are  countless  varieties  of 
exhaustible  fertility,  i.e.,  chemical  constituency,  differ- 
ing in  kind  and  degree,  from  the  nitrogen,  hydrogen, 
oxygen,  and  carbon  of  the  soil  to  the  carbon  of  the 
coal,  the  gold,  and  the  diamond.  Fertility  as  an  attri- 
bute need  not  be  predicated  of  agricultural  land  alone. 
Economic  fertility  belongs  equally  to  any  other  land 
which  yields  to  labor  its  product  whether  in  food, 
mineral,  or  metal.  Land  may  be  fertile  in  wheat,  com, 
and  potatoes.  It  may  be  fertile  in  cotton,  in  tobacco, 
or  in  rice.  It  may  be  fertile  in  diamonds,  in  gold, 
silver,  copper,  lead,  or  iron.  It  may  be  fertile  in  oil, 
coal,  or  natural  gas,  in  water  power  or  water  front. 
The  value  of  artificial  fertility  is  an  improvement 
value.  The  value  of  natural  fertility  of  any  kind  is 
a  site  value. 

9.  Q.    Does  not  the  single  tax  mean  the  nationalization  of 

land? 

A,  No ;  as  Henry  George  has  said,  "  The  primary  error 
of  the  advocates  of  land  nationalization  is  in  their 
confusion  of  equal  rights  with  joint  rights.  In  truth, 
the  right  to  the  use  of  land  is  not  a  joint  or  common 
right,  but  an  equal  right;  the  joint  or  common  right 
is  to  rent."  It  means  rather  the  socialization  of 
economic  rent.  It  simply  proposes  gradually  to  divert 
an  increasing  share  of  ground  rent  into  the  public 
treasury. 


I  «.  j 
11 


.i 


IN  I 


222         The  Principles  of  Natural  Taxation 

10.  Q.   What  is  the  distinction  between  the  taxation  of  land 

and  the  taxation  of  rent  ? 

A,  Taxing  land  means,  in  the  ordinary  use  of  the  words, 
to  tax  the  land  upon  its  capital  value,  or  selling  value, 
at  a  given  rate  per  $ioo  or  $i,ooo  of  that  value.  Tax- 
ing rent  means  taxing  the  annual  value,  or  ground- 
rent,  at  a  given  percentage  of  that  rent.  It  is  in  one 
case  a  tax  on  rent;  in  the  other  it  is  a  tax  on  capi- 
talized rent. 

11.  Q,    Does  not  the  common  right  to  rent  involve  common 

ownership  of  land? 

54'.  Not  in  the  least.  When  the  economic  rent  is  appro- 
priated by  the  community  for  common  purposes,  in- 
dividual ownership  of  land  could  and  should  continue. 
Such  ownership  would  carry  all  the  present  rights  of 
the  landowner  to  use,  control,  and  dispose  of  land, 
so  that  nothing  like  common  ownership  of  land  would 
be  necessary. 

12.  Q,   Did  not  Henry  George  believe  in  the  abolition  of 

private  property  in  land  ? 

!^.  Assuredly  not.  If  he  did,  why  was  it  that  he  suggested 
no  modification  whatever  of  present  land  tenure  or 
"estate  in  land"?  If  he  did,  how  could  he  have  said 
that  the  sole  "sovereign"  and  sufficient  remedy 
for  the  wrongs  of  private  property  in  land  was  "to 
appropriate  rent  by  taxation"? 

13.  0-   What  is  meant  by  the  right  of  property? 

'A,  As  to  the  grain  a  man  raises,  or  the  house  that  he 
builds,  it  means  ownership  full  and  complete.  As  to 


A  Catechism  of  Natural  Taxation 


223 


land,  it  means  legal  title,  tenure,  "estate  in  land,"  per- 
petual right  of  exclusive  possession,  a  right  not  abso- 
lute, but  superior  to  that  of  any  other  man. 

14.  Q.   What  is  meant  by  the  right  of  possession? 

A,  As  to  land,  if  permanent  and  exclusive,  as  on  perpetual 
lease,  it  means  the  right  to  "buy  and  sell,  bequeath 
and  devise,"  to  "  give,  grant,  bargain,  sell,  and  convey  " 
together  with  the  rights  and  privileges  thereto  per- 
taining, in  short,  the  same  definition  for  possession 
that  the  law  applies  to  property. 

15.  Q.   What  should  be  the  limit  of  revenue  under  the  single 

tax? 

A.  The  same  as  under  any  other  system  of  taxation,  the 
cost  of  government  economically  administered. 

16.  Q.    Did  not  Henry  George  hold  that  the  full  ground  rent 

of  land  should  be  taken  in  taxation  ? 

A.  No!  Not  only  did  he  concede  a  margin  of  rent  to 
the  landlord,  but  as  a  matter  of  fact,  as  Thomas  G. 
Shearman  said,  "not  all  the  power  of  all  govern- 
ments" could  collect  in  taxation  all  of  ground  rent. 

17.  Q.   You  would  not  say  that  land  is  a  product  of  industry? 

A.  No;  but  the  annual  site  value  of  land  is  a  product  of 
the  growth  and  industry  of  the  community. 

18.  Q.   You  would  not  say  that  the  supply  of  land  can  be 

increased  ? 

A.  No ;  but  fresh  demand  is  constantly  requiring  not  only 
an  increase  in  the  public  equipment  of  land  already  in 
use,  but  also  the  constant  extension  of  such  equipment 
to  new  area. 


- 1  ► 


m 


:i 


J 1 


I 


224         The  Principles  of  Natural  Taxation 


I' t 


1 1"* 


19-  Q- 


A. 


20.  Q. 

A. 


21. 

Q. 

A. 

22. 

Q. 

'A. 

23.  0. 

A. 


Why  should  buildings  and  all  other  improvements  and 
personal  property  and  capital  be  exempt  from  taxes? 
Because  a  tax  on  them  falls  upon  industry,  and  so  in- 
creases the  cost  of  living,  while  continuing  the  invidi- 
ous exemption  of  the  present  net  land  value. 

Why  should  stocks  and  bonds  be  exempt? 
Stocks,  because  they  are  only  paper  certificates  of 
property  which  itself  has  been  taxed  once  already. 
Bonds,  if  legitimate,  because  a  tax  on  borrowed  money 
is  paid  after  all  by  the  borrower  and  so  becomes  an 
added  factor  in  cost  of  production,  and  consequently 
in  the  cost  of  living. 

What  is  meant  by  an  "  old  tax  "  or  a  "  new  tax  "  ? 
By  the  term  "  old  tax"  is  intended  the  tax  in  force  at 
last  change  of  ownership;  by  a  "new  tax,"  one  im- 
posed since  then. 

What  is  privilege? 

Strictly  defined,  privilege  is,  according  to  the  Century 
Dictionary,  "  a  special  and  exclusive  power  conferred 
by  law  on  particular  persons  or  classes  of  persons  and 
ordinarily  in  derogation  of  the  common  right." 

What  is  today  the  popular  conception  of  privilege? 
That  it  is  the  law-given  power  of  one  man  to  profit  at 
another  man's  expense. 

What  are  the  principal  forms  of  privilege? 
The  appropriation  by  individuals,  or  by  public  service 
corporations,  of  the  net  rent  of  land  created  by  the 
growth  and  activity  of  the  community  without  pay- 
ment for  the  same.  Also,  the  less  important  privileges 
connected  with  patents,  tariff,  and  the  currency. 


A  Catechism  of  Natural  Taxation 


225 


25.  Q.   Wherein  does  privilege  differ  from  capital  ? 

'A.  Capital  is  a  material  thing,  a  product  of  labor,  stored- 
up  wages;  an  instrument  of  production  paid  for  in 
human  labor,  and  destined  to  wear  out.  Capital  is  the 
natural  ally  of  labor,  and  is  harmless  except  as  allied 
to  privilege.  Privilege  is  none  of  these,  but  is  an 
intangible  statutory  power,  an  unpaid- for  and  per- 
petual lien  upon  the  future  labor  of  this  and  suc- 
ceeding generations.  Capital  is  paid  for  and  ephem- 
eral. Privilege  is  unpaid  for  and  eternal.  A  man 
accumulated  in  his  profession  $5,000  capital,  which 
he  invested  in  land  in  Canada.  Ten  years  later  he 
sold  the  same  land  for  $200,000.  Here  is  an  instance 
of  $5,000  capital  allied  with  $195,000  privilege.  This 
illustrates  that  privilege  and  not  capital  is  the  real 
enemy  of  labor. 

26.  Q.   How  may  franchises  be  treated? 

A.  Franchise  privileges  may  be  abated,  or  gradually 
abolished  by  lower  rates,  or  by  taxation,  or  by  both, 
in  the  interest  of  the  community. 

27.  Q'   Why  should  privilege  be  especially  taxed? 

A,  Because  such  payment  is  fairly  due  from  grantee  to  the 
grantor  of  privilege  and  also  because  a  tax  upon  privi- 
lege can  never  be  a  burden  upon  industry  or  commerce, 
nor  can  it  ever  operate  to  reduce  the  wages  of  labor 
or  increase  prices  to  the  consumer. 

28.  Q.    How  are  landlords  privileged? 

A,  Because,  in  so  far  as  their  land  tax  is  an  "old"  tax, 
it  is  a  burdenless  tax,  and  because  their  buildings*  tax 
is  shifted  upon  their  tenants;  most  landlords  who  let 


I  ^ 


226         The  Principles  of  Natural  Taxation 

land  and  also  the  tenement  houses  and  business  blocks 
thereon  avoid  all  share  in  the  tax  burden. 

29.  Q.   How  does  privilege  affect  the  distribution  of  wealth? 

A,  Wealth  as  produced  is  now  distributed  substantially 
in  but  two  channels,  privilege  and  wages.  The  aboli- 
tion of  privilege  would  leave  but  the  one  proper  chan- 
nel, viz.,  wages  of  capital,  hand,  and  brain. 

30.  Q.   How  would  the  single  tax  increase  wages? 

A,  By  gradually  transferring  to  wages  that  portion  of  the 
current  wealth  that  now  flows  to  privilege.  In  other 
words,  it  would  widen  and  deepen  the  channel  of 
wages  by  enlarging  opportunities  for  labor,  and  by 
increasing  the  purchasing  power  of  nominal  wages 
through  reduction  of  prices.  On  the  other  hand,  it 
would  narrow  the  channel  of  privilege  by  making  the 
man  who  has  a  privilege  pay  for  it. 

31.  Q.  How  can  this  transfer  be  effected? 
A,  By  the  taxation  of  privilege. 

32.  Q.  How  much  ultimately  may  wages  be  thus  increased? 
A.  Fifty  per  cent  would  be  a  low  estimate. 

33.  Q.  What  are  fair  prices  and  fair  wages? 

A.  Prices  unenhanced  by  privilege,  and  wages  undimin- 
ished by  taxation. 

34.  Q.   Why  does  not  an  increase  in  ground  rent  tend  to  cause 

an  increase  in  prices? 

A,  Usually  sales  increase  faster  proportionately  than  rent, 
thus  reducing  the  ratio  of  rent  to  sales.  The  larger  the 
product,  the  lower  the  individual  costs.  The  larger 
the  gross  sales,  the  lower  the  competitive  prices. 


A  Catechism  of  Natural  Taxation 


227 


35.  Q.   Why  should  land  be  singled  out  to  bear  the  bulk  of  the 

burden  of  taxation? 

A.  Because  in  the  private  appropriation  of  the  net  rent  of 
land  is  found  the  bulk  of  privilege. 

36.  Q.    How  much  does  this  particular   form  of  privilege 

amount  to? 

A.  It  amounted  for  1914  to  approximately  forty  million 
dollars  for  Boston  and  more  than  two  hundred  million 
dollars  for  Greater  New  York. 

37.  Q.    Does  the  single  tax  imply  or  involve  the  municipaliza- 

tion of  public  utilities? 

A.  No.  A  public  franchise  value  is  a  land  value  which 
the  single  tax  would  assess  at  the  same  rate  as  other 
land  values.  The  municipalization  of  the  public  util- 
ities themselves  is  a  different  question,  and  is  no  nec- 
essary part  of  the  single  tax. 

38.  Q.   What  are  the  three  legs  of  the  tripos,  the  threefold 

support  upon  which  the  single  tax  rests  ? 

A,   They  are: 

(i)  The  social  origin  of  ground  rent  —  that  the  site 
value  of  land  is  a  creation  of  the  community,  a  public 
or  social  value. 

(2)  The  non-shiftability  of  a  land  tax  —  that  no  tax, 
new  or  old,  on  the  site  value  of  land  can  be  recovered 
from  the  tenant  or  user  by  raising  his  rent. 

(3)  The  ultimate  burdenlessness  of  a  land  tax  —  that 
the  selling  value  of  land,  reduced  as  it  is  by  the  capi- 
talized tax  that  is  imposed  upon  it,  is  an  untaxed 
value.  Whatever  lowers  the  income  from  land  lawers 


i  1 


1  ■, 

; 
' 

1 


h 


I 


228  The  Principles  of  Natural  Taxation 

proportionately  its  selling  price,  so  that  whether  the 
established  tax  upon  it  has  been  light  or  heavy,  it  is  no 
burden  upon  the  new  purchaser,  who  buys  it  at  its  net 
value  and  thus  escapes  all  part  in  the  tax  burden  which 
he  should  in  justice  share  with  those  who  now  bear 
it  all. 

39.  Q.   Is  not  land  peculiar  in  that  it  is  a  gift  of  the  Creator, 

and  is  not  a  product  of  labor? 

'A.  Yes,  that  is  true  of  land  itself,  but  not  of  the  value 
of  land. 

40.  Q,   What  is  meant  by  a  capitalized  tax  ? 

■A.   It  is  a  sum,  the  interest  of  which  would  pay  the  tax. 

41.  Q.   Why  would  the  single  tax  be  an  improvement  upon 

present  systems  of  taxation? 

A.  Because :  ( i )  The  taking  for  public  uses  of  that  value 
which  justly  belongs  to  the  public  is  not  a  tax;  (2) 
it  would  relieve  all  workers  and  capitalists  of  those 
taxes  by  which  they  are  now  unjustly  burdened,  and 
(3)  it  would  make  unprofitable  the  holding  of  land 
idle. 

42.  Q.    Should  not  all  people  pay  taxes  for  the  protection  of 

their  property? 

A.  Yes,  and  that  is  what  they  are  doing  when  they  pay 
their  ground  rent.  To  tax  them  again,  as  is  now  done, 
is  double  taxation. 

43.  Q.    Do  all  people,  then,  pay  ground  rent? 

A.  Yes,  in  proportion  as  they  are  users  of  land  having 
any  value. 


A  Catechism  of  Natural  Taxation 


229 


44.  Q.  Why,  on  similar  lots  of  land,  should  one  man  with  a 
$10,000  building  be  taxed  as  much  as  another  with  a 
$100,000  building? 

J5'.  Because  the  value  of  the  privilege  of  occupancy  and 
use  is  the  same  in  both  cases. 

45-  Q-  Why  tax  $1,000  invested  in  a  vacant  lot  while  exempt- 
ing $1,000  invested  in  New  York  Central  stock? 

A,  Because:  (i)  the  land  is  made  worth  $1,000  and  so 
maintained  at  public  expense  without  any  contribution 
from  the  owner;  (2)  the  $1,000  New  York  Central 
stock  adds  nothing  to  the  public  expense,  but  a  tax 
upon  it,  if  collected  at  the  source,  falls  directly  on  the 
road  and  thence  upon  the  public,  and  so  adds  to  the 
cost  of  living. 

46.  Q.   Would  it  not  be  confiscation  so  to  increase  the  tax  on 

land? 

A.  What  would  be  "confiscated"?  No  land  would  be 
taken,  no  right  of  occupancy,  or  use,  or  improvement, 
or  sale,  or  devise ;  nothing  would  be  taken  that  is  con- 
veyed or  guaranteed  by  the  title  deed. 

47.  Q.   What  is  the  distinction  between  taxation  and  con- 

fiscation ? 

A.  The  sovereign  state  may  appropriate  private  property 
of  its  citizens  in  two  ways:  (i)  by  confiscation; 
(2)  by  taxation.  When  one  particular  man  by  treason 
or  otherwise  has  forfeited  his  rights  as  a  citizen,  the 
lands  and  houses  and  personalty  of  this  one  man  may 
all  be  "  forfeit  to  the  crown,"  while  the  validity  and 
sanctity  of  9,999  other  men's  rights  are  in  no  way  in- 


^% 


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I 


t 


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II 


1 . 


230         The  Principles  of  Natural  Taxation 

fringed.  This  is  confiscation.  On  the  other  hand, 
when  the  state,  in  order  to  obtain  the  revenue  to  meet 
the  expenses  of  government,  levies  tribute  upon  its 
10,000  citizens  impartially,  this  is  taxation. 

48.  Q.   But  would  it  not  be  an  injustice  to  the  landowner? 

'A,  If  it  be  an  injustice  to  tax  hard-earned  incomes 
(wages)  to  maintain  an  unearned  income  (net  eco- 
nomic rent)  that  bears  no  tax  burden,  how  can  it  be 
an  injustice  to  stop  doing  so?  There  can  be  no  in- 
justice in  taking  for  the  benefit  of  the  community  the 
value  that  is  created  by  the  community. 

49.  Q.    What  is  the  lesson  of  the  inevitable  "capitalization" 

of  the  land  tax  ? 

A,  It  is  that  an  unfair  discrimination  in  favor  of  the  land- 
owner can  never  be  overcome  until  all  taxes  are  paid 
out  of  ground  rent;  then  all  men  will  enjoy  total 
exemption  equally  with  the  landowner. 

50.  Q.   How  could  the  landowner  escape  the  alleged  burden 

of  an  increase  in  his  land  tax? 

A.  Simply  by  assuming  the  legitimate  role  of  a  model 
landlord,  by  putting  his  land  to  suitable  use,  in  provid- 
ing for  tenants  at  lowest  possible  price  the  best 
accommodations  and  facilities  appropriate  to  the  situa- 
tion that  money  can  buy. 

Does  not  a  land  tax  increase  house  rent  or  store  rent  ? 


A  Catechism  of  Natural  Taxation 


231 


51.  Q- 
A, 


The  landlord,  as  a  rule,  exacts  the  full  ground  rent 
for  the  use  of  his  land.  Neither  by  taking  $3  nor 
$30  per  thousand  in  taxation  can  land  be  made  worth 
any  more  for  use. 


52.  Q.    In  old  cities,  is  not  nearly  all  the  land  in  use  ? 

A.  About  one-half  the  area  of  New  York  and  Chicago  is 
classed  by  the  assessors  as  vacant.  In  Boston  the  pro- 
portion is :  occupied,  45  per  cent ;  vacant,  43  per  cent ; 
marsh,  12  per  cent. 

53.  Q.   How  would  the  single  tax  affect  the  farmer? 

A.  It  would  greatly  reduce  his  taxes.  His  buildings, 
stock,  and  crops  would  be  exempt.  His  land  is  at  pres- 
ent assessed  at  nearly  twice  its  proper  unimproved 
value,  while  town  and  city  land  is  often  valued  at  less 
than  one-half  its  actual  value,  thus  subjecting  him  to 
a  more  than  fourfold  disadvantage. 

54.  Q.    What  relief   could  it  bring   to   strictly   agricultural 

towns,  where  the  unimproved  land  values  are  very 
small  ? 
A.  However  poor  the  town  or  heavy  the  taxes,  it  would 
at  least  tend  to  equalize  their  present  tax  burden.  The 
assessed  valuation  of  land  in  the  three  smallest  towns 
of  Massachusetts,  Alford,  Holland,  and  Peru,  is  $282,- 
335,  or  more  than  three  times  that  of  the  buildings. 
Allowing  one-half  of  the  assessed  valuation  of  land  to 
be  improvement  value,  the  unimproved  basis  for  taxa- 
tion would  be  $141,168,  or  60  per  cent  more  than  the 
buildings.  Thus  an  apportionment  according  to  unim- 
proved land  values,  increasing  ever  so  slowly,  would 
seem  to  be  fairer  than  one  according  to  improvements, 
which  require  constant  renewal.; 

55.  Q.    How  would  the  single  tax  affect  the  tenant? 

A,  It  would  neither  increase  nor  decrease  his  land  rent. 
It  would  reduce  his  house  rent  by  the  amount  of  the 
house  tax. 


'.  si 


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i     i 

i 

4 

1 


232         The  Principles  pi  Natural  Taxation 

56.  Q.   How  would  it  affect  the  man  who  owns  the  house  he 

lives  in? 

A.  In  nearly  every  case  it  would  reduce  his  taxes.  Roughly 
speaking,  his  taxes  will  be  less  or  greater  in  proportion 
as  his  house  is  worth  more  or  less  than  his  land. 

57.  Q.   Would  the  single  tax  yield  sufficient  revenue  for  all 

government  purposes,  local,  state,  and  national  ? 

A.  Careful  estimates  by  Mr.  Thomas  G.  Shearman  in- 
dicate that  all  present  taxes  amount  to  not  much 
more  than  one-half  of  the  annual  site  value  of  the 
land.     But,  he  said: 

The  honest  needs  of  public  government  grow  faster 
than  population  and  fully  as  fast  as  wealth  itself.  Local 
taxation  will  increase  rapidly;  and  it  ought  to  do  so. 
....  This  does  not  imply  that  ground  rent  will  not 
be  sufficient  to  supply  many,  possibly  all,  of  those  addi- 
tions to  human  happiness  which  Henry  George  has  pic- 
tured in  such  glowing  words.  But  such  extensions  of  the 
sphere  of  government  must  take  place  gradually ;  or  they 
will  be  ruinous  failures,  simply  because  the  state  cannot 
at  once  furnish  the  necessary  machinery  for  their  suc- 
cessful operation. 

58.  Q.   What  expected  result  of  the  single  tax  needs  studious 

emphasis  ? 

"A,  That  it  would  unlock  the  land  to  labor  at  its  present 
value  for  use,  instead  of  locking  out  labor  from  the 
land  by  a  prohibitive  price  based  upon  the  future 
value  for  use. 

59.  Q.    Is  it  correct  to  say  that  "  land  "  is  one  thing,  and  the 

"  rent  of  land  "  another  and  quite  different  thing,  and 


A  Catechism  of  Natural  Taxation 


233 


that  to  take  in  taxation  the  rent  of  land  it  is  not  neces- 
sary to  take  the  land  itself? 

A.   Ninety-one    professors    of    political    economy    have 
answered  "  Yes."    Twenty-three  have  answered  "  No." 

60.  Q.    Do  you  believe  that  economic  rent  ought  to  furnish 

a  larger  proportion  of  public  revenue  than  it  does  now? 

A.  One  hundred  and  nineteen  professors  of  political 
economy  have  answered  "Yes."    Eight  have  answered 

"  No." 

61.  Q.    Do  you  think  there  would  be  any  injustice  in  taking 

by  taxation  the  future  increment  in  the  value  of  land  ? 

A,  Fifteen  professors  of  political  economy  have  answered 
"Yes."    Ninety- four  have  answered  "No." 

62.  Q.    Would  it  be  wise  to  take  gradually  in  taxation  say 

one-quarter,  one-half,  or  three-quarters  of  the  future 
increase  in  economic  rent? 

A,  One  hundred  and  one  professors  of  political  economy 
have  answered  "Yes."  Twenty-nine  have  answered 
"  No." 

63.  Q.   How  could  the  single  tax  be  put  into  operation? 

A,  By  gradually  transferring  to  land  all  taxes  not  already 
on  it. 

64.  Q.    How  might  such  a  plan  be  worked  out? 

A.  If  fifty  cents  per  thousand  should  be  deducted  yearly 
for  thirty  years  from  the  rate  on  all  property  other 
than  land,  the  reduction  would  finally  amount  to  $15 
per  thousand,  and  it  would  then  be  practically  exempt 
from  all  taxation. 


^ 


p^' 

■Mllii 

m 


234         The  Principles  of  Natural  Taxation 

65.  Q.   But  how  could  it  be  worked  out  in  case  of  the  land? 

A.  Recognizing  that  a  right  thing  may  be  done  in  a  wrong 
way,  it  is  insisted  that  a  right  way  ought  to  be  found 
to  do  a  thing  that  ought  to  be  done.  The  following  is 
presented  as  a  natural  and  convenient  unit  of  calcula^ 
Hon:  To  be  exact,  an  average  of  about  20  per  cent 
of  the  gross  ground  rent  of  land  is  now  taken  in  taxor- 
tion,  for  instance,  in  Boston,  as  well  as  for  the  whole 
state  of  Massachusetts.  If  an  additional  I  per  cent 
should  he  taken  each  year  for  thirty  years,  it  would 
amount  at  the  end  of  that  period  to  jo  per  cent,  which, 
added  to  20  per  cent,  would  make  ^0  per  cent,  or  one- 
half,  which  is  about  the  average  proportion  that 
present  taxes  levied  on  all  property  hear  to  gross 
ground  rent.  Meantime  few  landowners  would  feel 
the  change,  much  less  be  prejudiced  by  it. 

The  following  variable  illustrations.  A,  B,  and  C,  make 
clear 

'A  "Modus  Operandi" 

A 
Increase  of  Present  Tax 

For  instance,  applied  to  the  assessment  of  a  specific  lot  of  land 

for  which  the  user  pays  a  gross  ground  rent  of  say $68.00 

Of  which  amount  there  is  taken  in  taxation,  1915 $18.00 

Leaving  a  net  income  to  the  owner  of $50.00 

The  selling  value  (presumably  also  the  assessed  valuation)  would 

be  at  5  per  cent $1,000.00 

Proceeding  to  take  yearly  from  now  on  i  per  cent  additional  of  the 

gross  ground  rent  of  $68  for  a  period  of  thirty  years  would 

amount  in  all  to  30  per  cent  of  $^,  equal  to $20.40 

Which,  added  to  the  tax  already  taken $18.00 

Would  give  at  the  end  of  thirty  years,  from  the  $1,000  worth  of    • 

land  alone,  everything  else  being  exempted,  a  total  tax  of  $38.40 

Which  is  not  much  more  than  one-half  of  the  gross  ground  rent  of  $68.00 


A  Catechism  of  Natural  Taxation  235 

The  opening  exhibit  in  detail  would  stand  as  follows : 

In  191S  the  tax  on  this  $i,ooo  worth  of  land  was $18.00 

In  1910  the  tax  would  be  $18  plus  68  cents  (i  per  cent  of  the  gross 

ground  rent,  $68) ;  equal  to $18.68 

Reducing  the  owner's  net  rent  from  $50  to  $49'32- 

In  1917  the  tax  would  be  $18  plus  $1.36  (2  per  cent  of  the  $68), 

totaling    , $1936 

Reducing  the  owner's  net  rent  from  $50  to  $48.64. 

In  1918  the  tax  would  be  $18  plus  $2.04  (3  per  cent  of  the  $68),  or     $20.04 

Reducing  the  owner's  net  rent  from  $50  to  $47-96. 

In  1945  the  tax  on  the  land  would  be  $18  plus  $20.40  (30  per  cent 

of  the  $68)  or $3840 

With  all  improvements  exempted. 

Reducing  the  owner's  net  rent  from  $50  to  $29.60. 


B 
For  a  Future  Increment  Tax 

The  taking  in  taxation  of  any  desired  proportion  of  the 
future  increment  could  be  accomplished  simply  by  continuing 
the  present  valuation  and  present  rate  as  constant  factors  and 
making  a  separate  individual  assessment  of  the  increment  tax 
after  the  following  or  similar  formula,  according  to  the  pro- 
portion to  be  taken.  For  instance,  to  take  in  taxation  50  per 
cent  of  the  future  increase: 


Year 

I9IS 

I916 

191S 

1917 

1915 

I918 

I915 

I919 

I915 

1920.., 


Valua- 
tion 

Incre- 
ment 

Rate 
perM. 

$1,000 
1,040 

$40 

$25 

1,000 
1,080 

80 

25 

1,000 
1,120 

120 

25 

1,000 
1,160 

160 

25 

1. 000 
1,200 

200 

25 

Tax  for  Each  Year 


Tax  for  year  1916,  $1 

Tax  for  year  191 7,  $2 

Tax  for  year  I9i8>  $3 

Tax  for  year  1919,  $4 

Tax  for  year  1920,  $5 


». 


fr 


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II  (I 


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236         The  Principles  of  Natural  Taxation 

In  applying  this  formula  it  would  be  necessary  after  the 
first  few  years  at  least  to  increase  the  rate  to  correspond  to  the 
decrease  in  assessed  valuation  due  to  this  new  tax.  For  com- 
putations upon  this  and  related  points,  see  the  Report  of  the 
New  York  City  Commission  on  New  Sources  of  City  Revenue 
(1913),  p.  7  and  Appendices  X  to  XV. 


A  Catechism  of  Natural  Taxation 


237 


The  'Assessment  of  Rent 

It  should  be  reiterated  that  inasmuch  as  gross  ground  rent, 
actual  or  potential,  is  the  initial  factor  in  getting  at  the  value 
of  land,  it  cannot  be  unprofitable  to  become  familiar  with  a 
more  correct  formula  as  expressed  in  terms  of  rent. 

Starting  with  the  present  unit  of  annual  value  for  use  to 
take  in  taxation  in  25  years  50  per  cent  of  the  future  increase 
in  ground  rent: 


Year 


I9I5. 

I9I6. 

1915- 
I9I7. 

I9I5. 
I9I8. 

I9I5. 
I9I9. 

1915. 

1920. 

I9I5. 
1940. 


Net 

Ground 

Rent 


$50 
52 

50 
54 

50 
S6 

5° 
58 

50 
60 

50 
100 


Incre- 
ment 


$2 

4 
6 

8 

10 

50 


Per- 
centage 
of  Rent 


50 


50 


50 


50 


50 


50 


Tax  for  Each  Year 


Tax  for  year  1916,  $1 
Tax  for  year  1917,  $2 
Tax  for  year  1918,  $3 
Tax  for  year  1919,  $4 
Tax  for  year  1920,  $5 
Tax  for  year  1940,  $25 


66.  Q.   What  has  the  single  tax  to  say  about  the  taxation  of 
forest  lands? 

A.  Perhaps  the  majority  opinion  would  be  to  tax  annually 
all  forests  old  or  new  on  what  would  be  the  value  of 
the  land  if  denuded  of  all  growth — a  stumpage  tax  to 
be  collected  upon  old  growth  timber  when  cut,  but  not 
upon  new  growth  such  as  may  reasonably  be  classed 
as  a  cultivated  crop. 


i 


} 


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t 


■Ill: 


T\<\- 


t4 


APPENDIX 


The  Physiocrats 

A  SCHOOL  of  economists  represented  by  Quesnay  and 
Turgot,  who  flourished  in  the  latter  part  of  the  eight- 
eenth century,  advanced  a  plan  for  the  taxation  of  land  which 
bore  a  superficial  resemblance  to  the  single  tax.  We  do  not 
need  to  give  them  extended  notice  here,  because  the  impot 
uniqtie  of  Quesnay  and  his  school  so  far  differed  from  the 
single  tax  of  Henry  George,  both  in  its  underlying  theory  and 
in  its  avowed  purpose,  that  only  confusion  can  result  from 
associating  them  under  a  common  name.  The  physiocrats 
believed  that  all  taxes,  however  laid,  finally  fall  upon  the  net 
product  of  the  soil,  which  they  considered  the  only  fund  from 
which  taxes  can  possibly  come.  They  held  that  taxes  on 
industry,  trade,  or  commodities  do  not  fall  upon  consumers, 
but,  increased  by  needless  costs  of  collection  and  aggravated 
by  the  injury  done  to  trade,  are  finally  shifted  back  to  the 
landowner.  Therefore  they  advocated  the  abolition  of  all 
other  taxes  and  the  establishment  of  a  single  tax,  not  on  the 
potential  rent  of  land,  but  on  the  net  product  of  land.  This 
was  not  for  the  purpose  of  altering  the  incidence  of  taxation, 
but  was  advocated  merely  as  the  cheapest  and  least  disadvan- 
tageous method  of  collecting  the  taxes  which  the  landowners, 
under  any  system  of  taxation,  were  supposed  to  be  ultimately 
bound  to  pay.  Far  from  regarding  private  appropriation  of 
rent  as  evil,  like  Mr.  George,  the  physiocrats  accepted  it  as 
part  of  the  natural  order  of  society;  and  their  fiscal  proposal 

241 


! 

w 

i 

' 

h 

242        The  Principles  of  Natural  Taxation 

was  designed  merely  to  reduce  the  cost  of  collecting  the  nation's 
taxes  and  to  avoid  the  incidental  evils  of  taxes  on  industry 
and  commerce.  The  idea  of  socializing,  by  taxation,  the 
economic  rent  of  land  never  entered  into  the  physiocratic  phi- 
losophy; and  modem  admirers  of  the  physiocrats  have  been 
vainly  challenged  to  produce  any  evidence  that  the  school  ever 
imderstood  the  theory  of  rent  or  anticipated  in  any  way  the 
conclusions  which  Henry  George  based  upon  that  theory.  No 
one  having  a  first-hand  knowledge  of  the  writings  of  the 
physiocrats,  which  Mr.  George  expressly  disclaimed,  will  main- 
tain that  anything  more  than  a  purely  nominal  relationship 
and  superficial  resemblance  exist  between  the  ideas  of  the 
French  economists  and  the  teaching  of  Henry  George. 

It  is  worthy  of  remark  that  the  foregoing  view  has  com- 
manded the  general  assent  of  our  leading  present-day  econo- 
mists, of  whom  105  have  expressed  formal  approval,  while  13 
have  formed  no  opinion,  and  only  3  recorded  themselves  in 
opposition. 


Appendix 


243 


II 


Thomas  Spence,  1750-1815 

^T^HOMAS  SPENCE  is  one  of  the  earliest  names  to 
■*"  traverse  our  field  of  observation.  Son  of  a  net-maker, 
he  was  a  school  teacher,  equally  appreciated  for  his  ability 
and  distinguished  for  his  eccentricity.  In  a  lawsuit  concern- 
ing an  inclosed  common  in  Newcastle,  it  was  decided  that  the 
rent  of  the  land  involved  should  be  divided  among  all  the  free 
men  of  the  town.  This  decision  gave  Spence  the  suggestion 
for  a  paper  on  "The  Constitution  of  a  Perfect  Common- 
wealth," which  he  read  before  the  Philosophical  Society  of 
Newcastle  in  1775.  He  argued,  in  this  essay,  that  the  rent 
of  all  land  should  be  distributed  similarly.  The  proposal  was 
not  well  received,  and  Spence  was  expelled  from  the  Society 
for  printing  his  paper.  After  his  expulsion  he  moved  to 
London,  where  he  maintained  himself  as  a  bookseller.  The 
proposal  which  he  sets  forth  in  his  "  Constitution  of  a  Perfect 
Commonwealth"  might  be  described  as  a  scheme  for  the 
socialization  of  the  rent  of  both  land  and  improvements.  The 
following  quotations  will  be  sufficient  to  convey  a  fair  state- 
ment of  his  doctrine,  so  far  as  it  relates  to  the  treatment  of 
rent  in  the  meaning  of  the  term  generally  accepted  at  that 
time : 

Let  it  be  supposed,  then,  that  the  whole  people  in  some  coun- 
try, after  much  reasoning  and  deliberation,  should  conclude  that 
every  man  has  an  equal  property  in  the  land  in  the  neighbor- 
hood where  he  resides.    They  therefore  resolve  that  if  they  live 


",  n 


♦  li'i 


244         The  Principles  of  Natural  Taxation 

in  society  together  it  shall  only  be  with  a  view  that  everyone 
may  reap  all  the  benefits  from  their  natural  rights  and  privileges 
possible.  Therefore  a  day  is  appointed  on  which  the  inhabit- 
ants of  each  parish  meet,  in  their  respective  parishes,  to  take 
their  long-lost  rights  into  possession,  and  to  form  themselves  into 
corporations.  So  then  each  parish  becomes  a  corporation,  and 
all  the  men  who  are  inhabitants  become  members  or  burghers. 
The  land,  with  all  that  appertains  to  it,  is  in  every  parish  made 
the  property  of  the  corporation  or  parish,  with  as  ample  power 
to  let,  repair,  or  alter  all,  or  any  part  thereof,  as  a  lord  of  the 
manor  enjoys  over  his  lands,  houses,  etc.,  but  the  power  of 
alienating  the  least  morsel,  in  any  manner,  from  the  parish, 
either  at  this  or  any  time  hereafter,  is  denied.  For  it  is  solemnly 
agreed  to,  by  the  whole  nation,  that  a  parish  that  shall  either 
sell,  or  give  away,  any  part  of  its  landed  property  shall  be  looked 
upon  with  as  much  horror  and  detestation,  and  used  by  them 
as  if  they  had  sold  all  their  children  to  be  slaves,  or  massacred 
them  with  their  own  hands.  Thus  are  there  no  more  for  other 
landlords,  in  the  whole  country  than  the  parishes ;  and  each  of 

them  is  sovereign  landlord  of  its  own  territories 

There  you  may  behold  the  rent,  which  the  people  have  paid 
into  the  parish  treasuries,  employed  by  each  parish  in  paying  the 
government  so  much  per  pound  to  make  up  the  sum  which  the 
parliament  or  national  representation  at  any  time  think  requisite ; 
in  maintaning  and  relieving  its  own  poor,  and  people  out  of 
work;  in  paying  the  necessary  officers  their  salaries;  in  building, 
repairing,  and  adorning  its  houses,  bridges,  and  other  structures ; 
in  making  and  maintaining  convenient  and  delightful  streets, 
highways,  and  passages,  both  for  foot  and  carriages ;  in  making 
and  maintaining  canals  and  other  conveniences  for  trade  and 
navigation;  in  planting  and  taking  in  waste  grounds;  in  pro- 
viding and  keeping  up  a  magazine  of  ammunition  and  all  sorts 
of  arms  sufficient  for  all  its  inhabitants  in  case  of  danger  from 
enemies;  in  premiums  for  the  encouragement  of  agriculture, 
or  anything  else  thought  worthy  of  encouragement;  and,  in  a 
word,  in  doing  whatever  the  people  think  proper;  and  not,  as 
formerly,  to  support  and  spread  luxury,  pride,  and  all  manner 

of  vice 

There  are  no  tolls  or  taxes  of  any  kind  paid  among  them, 
by  native  or  foreigner,  but  the  aforesaid  rent.  The  government, 
poor,  roads,  etc.,  etc.,  as  said  before,  are  all  maintained  by  the 


Appendix 


245 


parishes  with  the  rent;  on  which  account,  all  wares,  manufac- 
tures, allowable  trade,  employments,  or  actions  are  entirely  duty- 
free. Freedom  to  do  anything  whatever  cannot  there  be  bought ; 
a  thing  is  either  entirely  prohibited,  as  theft  or  murder,  or 
entirely  free  to  everyone,  without  tax  or  price. 

When  houses,  lands,  or  any  tenements  become  vacant  they 
are  let  publicly  by  the  parish  officers  in  seven  years'  leases  to 
the  best  bidder.  This  way  prevents  collusion,  to  the  prejudice  of 
the  parish  revenue,  and  likewise  prevents  partiality. 

Methinks  I  now  behold  the  parish  republics,  like  fraternal 
or  benefit  societies,  each  met  at  quarter-day  to  pay  their  rents 
and  to  settle  their  accounts,  as  well  with  the  State  as  with  all 
their  parochial  officers  and  workmen,  their  several  accounts  having 
been  examined  some  days  before. 

On  that  day,  which  is  always  a  day,  not,  as  now,  of  sorrow, 
but  of  gladness,  when  the  rents  are  all  paid  in,  and  the  sum  total 
proclaimed,  the  first  account  to  be  settled  is  the  demand  made 
by  the  national  representation  of  so  much  per  pound  in  behalf 
of  the  State,  which  sum  is  set  apart  to  be  sent  to  the  national 
treasury.  Another  sum  is  also  set  apart  for  the  parish  treasury 
to  answer  contingencies  till  next  quarter-day.  Next  the  salaries 
of  the  parish  officers  are  paid.  Then  are  paid  the  respective 
bills  of  their  workmen,  as  masons,  bricklayers,  carpenters,  gla- 
ziers, painters,  etc.,  who  have  been  employed  in  building  or 
repairing  the  houses  and  other  parish  buildings.  After  these 
come  the  paviors,  lamplighters,  watchmen,  scavengers,  and  all 
the  other  work-people  employed  by  the  parish,  to  receive  their 
demands,  until  none  remain.  Then  the  residue  of  the  public 
money  or  rents,  after  all  public  demands  are  thus  satisfied,  which 
is  always  two-thirds,  more  or  less,  of  the  whole  sum  collected, 
comes  lastly  to  be  disposed  of,  which  is  the  most  pleasant  part 
of  the  business  to  everyone.  The  number  of  parishioners,  and 
the  sum  thus  left  to  be  divided  among  them  being  announced, 
each,  without  respect  of  persons,  is  sent  home  joyfully  with  an 
equal  share. 

The  defects  and  fallacies  in  Spence's  reasoning  are  obvious. 
In  the  first  place,  he  had  no  conception  of  the  nature  of  eco- 
nomic rent,  and  used  the  term  rent  to  include  both  the  rent  of 
land  and  the  rent  of  houses  and  other  improvements  upon  it. 


;  ■  ( 


.,''! 


246         The  Principles  of  Natural  Taxation 

This  failure  to  distinguish  between  rent  and  interest  is  suffi- 
cient to  vitiate  his  treatment  of  the  whole  subject.  Moreover, 
he  did  not  discriminate,  as  did  Ogilvie,  at  about  the  same  time, 
between  the  various  kinds  of  value  in  the  case  of  land.  This 
defect  was  an  exhibition  of  weakness  in  scientific  analysis. 
Furthermore,  his  proposal  of  a  seven-year  period  between 
leases  would  give  to  tenants  the  advantage  of  a  large  part 
of  the  future  increment  of  land  value.  Finally,  his  conclu- 
sion was  manifestly  illogical  that  the  alleged  equal  right  to 
land  requires  the  equal  distribution  of  the  surplus  of  the  rent 
above  the  amount  needed  for  taxes.  Indeed,  the  fundamental 
fallacy  of  his  scheme  was  in  his  corollaries  to  the  doctrine  of 
equal  rights,  which  he  comprehended  dimly  and  interpreted 
crudely.  His  plan  was  thus  based  on  an  insecure  foundation, 
and  not  on  incontestable  economic  expediency  and  social  jus- 
tice. The  whole  project  is  far  removed  from  the  single-tax 
plan  as  it  has  taken  shape  in  the  writings  of  Henry  George 

and  his  followers. 

It  will  be  seen  that  Spence  bases  his  whole  scheme  on  the 
equal  right  of  all  men  to  land.  This  was  also  a  principle 
which  Henry  George  emphasized  as  one  of  the  supports  of  his 
single  tax.  In  fact,  the  whole  scheme  has  a  superficial  resem- 
blance to  that  of  Henry  George.  In  both  is  assumed  the  equal 
right  to  land;  in  both  is  this  right  to  be  liquidated  by  a  joint 
appropriation  of  rent;  in  both  is  the  right  to  the  private 
ownership  of  land  and  the  private  appropriation  of  rent  de- 
nied ;  in  both  rent  is  to  be  made  the  sole  revenue  of  the  State. 
But  there  are  important  differences.  Spence  having,  unlike 
George,  no  conception  of  economic  rent  as  a  social  product, 
could  make  no  second  claim  for  the  right  of  its  appropriation 
by  the  State  on  this  basis.  His  fatal  shortcoming  was  the 
failure  to  make  the  vital  distinction  between  income  from  land 


Appendix 


247 


and  income  from  improvements,  which  modern  economists 
insist  upon  as  the  difference  between  rent  and  interest.  He 
proposed  to  "nationalize"  land  by  making  the  parish  the 
universal  landlord,  in  this  respect  suggesting  the  line  of  thought 
of  Herbert  Spencer  in  his  earlier  writings.  George  would 
adopt  the  simpler  expedient  of  leaving  the  former  "  owners  " 
in  undisputed  "possession"  after  appropriating  from  them 
practically  the  entire  volume  of  economic  rent 


248         The  Principles  of  Natural  Taxation 


Appendix 


249 


M 


■'iiii 


M 


III 


William  OgUvie,  1736-1817 

TTTILLIAM  OGILVIE  was  born  in  Pittensear,  Scotland, 
*  '  1736.  Information  concerning  his  life  is  very  meager. 
At  nineteen  years  of  age  he  entered  King's  College,  Aberdeen, 
from  which  he  was  graduated  in  1759.  He  was  then  appointed 
master  of  a  grammar  school  at  Cullen,  where  he  remained 
for  one  year.  In  1760-61  he  attended  the  University  of  Glas- 
gow, and  in  the  following  year  the  University  of  Edinburgh. 
In  November,  1761,  he  was  appohited  assistant  professor  of 
philosophy  in  King's  College,  Aberdeen,  with  the  understand- 
ing that  he  should  be  chosen  to  fill  the  first  vacancy  in  a  regent's 
place.  His  appointment  as  full  regent  was  made  in  1765.  The 
following  year  he  exchanged  offices  with  the  professor  of 
humanity,  and  continued  to  teach  the  humanity  classes  until 
181 7,  when  he  died.  It  is  said  that  Professor  Ogilvie  was 
the  most  energetic  member  of  the  college  senate,  and  he  fre- 
quently came  into  conflict  with  his  conservative  colleagues  on 
account  of  his  progressive  views.  The  pages  of  the  college 
minutes  are  punctuated  with  his  vigorous  protests  against 
decisions  of  the  majority. 

Ogilvie's  great  work,  "An  Essay  on  the  Right  of  Property 
in  Land  with  Respect  to  Its  Foundation  in  the  Law  of  Nature, 
Its  Present  Establishment  by  the  Municipal  Laws  of  Europe 
and  the  Regulations  by  Which  It  Might  Be  Rendered  More 
Beneficial  to  the  Lower  Ranks  of  Mankind,  was  written  during 


the  years  1776-81,  and  was  published  in  1782.^  The  work 
is  a  notable  contribution  to  economic  literature,  a  product  of 
original  and  independent  thinking. 

At  the  outset  of  the  discussion  he  makes  two  important 
contributions  to  the  theoretical  analysis  of  the  land  question. 
These  are:  (i)  his  recognition  of  a  conflict  between  the 
alleged  common  right  to  land  and  the  claims  to  more  than  an 
equal  share  of  land  founded  on  labor  and  supported  by  the 
concrete  requirements  of  economic  progress;  (2)  his  distinc- 
tion between  three  kinds  of  land  value,  viz.,  original  value, 
accessory  or  improved  value,  and  contingent  or  improvable 
value. 

As  to  the  first  of  these,  Ogilvie  takes  as  his  starting-point 
in  examining  the  basis  of  the  right  of  property  in  land  the 
proposition,  "  All  right  of  property  is  founded  either  in  occu- 
pancy or  labor."  From  this  premise  he  reasons  further  as 
follows : 

The  earth  having  been  given  to  mankind  in  common  occu- 
pancy, each  individual  seems  to  have  by  nature  a  right  to  possess 
and  cultivate  an  equal  share.  This  right  is  little  different  from 
that  which  he  has  to  the  free  use  of  the  open  air  and  running 
water. 

With  respect  to  the  right  of  occupancy  he  holds : 

No  individual  can  derive  from  this  general  right  of  occupancy 
a  title  to  any  more  than  an  equal  share  of  the  soil  of  this  country. 
His  actual  possession  of  more  cannot  of  right  preclude  the  claim 
of  any  other  person  who  is  not  already  possessed  of  equal  share. 

This  title  to  an  equal  share  of  property  in  land  seems  original, 
inherent,  and  indefeasible  by  any  act  or  determination  of  others, 
though  capable  of  being  alienated  by  our  own.  It  is  a  birthright 
which  every  citizen  still  retains. 

^  Republished  as  Birthright  in  Land  by  Kegan  Paul,  Trench,  Trubner 
&  Co.,  Ltd.,  London,  1891. 


Wti 


il; 


» i 


'   1 


I 


m 


250        The  Principles  of  Natural  Taxation 

Concerning  the  claims  to  an  unequal  share  of  land  founded 
on  labor,  he  argues : 

That  right  which  the  landholder  has  to  an  estate,  consisting 
of  a  thousand  times  his  own  original  equal  share  of  the  soil, 
cannot  be  founded  in  the  general  right  of  occupancy,  but  in  the 
labor  which  he  and  those  to  whom  he  has  succeeded,  or  from 
whom  he  has  purchased,  have  bestowed  on  the  improvement  and 
fertilization  of  the  soil.  To  this  extent  it  is  natural  and  just; 
but  such  a  right  founded  in  labor  cannot  supersede  that  natural 
right  of  occupancy  which  nine  hundred  and  ninety-nine  other 
persons  have  to  their  equal  shares  of  the  soil  in  its  original  state. 
Although  it  may  bar  the  claims  of  individuals,  it  cannot  preclude 
that  of  the  legislature,  as  trustee  and  guardian  of  the  whole. 

The  conflict  between  these  two  rights  —  the  claims  to  an 
equal  share  of  land,  involving  right  of  occupancy,  and  the 
claim  to  more  than  an  equal  share,  based  on  labor — Ogilvie 
sets  forth  in  these  words : 

That  every  man  has  a  right  to  an  equal  share  of  the  soil,  in 
its  original  state,  may  be  admitted  to  be  a  maxim  of  natural  law. 
It  is  also  a  maxim  of  natural  law,  that  everyone,  by  whose 
labor  any  portion  of  the  soil  has  been  rendered  more  fertile, 
has  a  right  to  the  additional  produce  of  that  fertility,  or  to  the 
value  of  it,  and  may  transmit  this  right  to  other  men.  On  the 
first  of  these  maxims  depend  the  freedom  and  prosperity  of  the 
lower  ranks;  on  the  second,  the  perfection  of  the  art  of  agri- 
culture, and  the  improvement  of  the  common  stock  and  wealth 
of  the  community.  Did  the  laws  of  any  country  pay  equal  regard 
to  both  these  maxims,  so  as  they  might  be  made  to  produce  their 
respective  good  effects,  without  intrenching  on  one  another,  the 
highest  degree  of  public  prosperity  would  result  from  this 
combination. 

He  adds  this  acute  observation :  "  Rude  nations  have  ad- 
hered to  the  first  of  these  maxims,  neglecting  the  second. 
Nations  advanced  in  industry  and  arts  have  adhered  to  the 
second,  neglecting  the  first." 


Appendix 


251 


The  crux  of  the  land  problem,  according  to  Ogilvie's 
analysis,  lies  in  the  reconciliation  of  these  two  conflicting 
rights.    He  states : 

To  establish  a  just  combination  of  these  two  maxims,  at  the 
original  foundation  of  states,  so  as  to  render  it  a  fundamental 
part  of  their  frame  and  constitution,  or  to  introduce  it  after- 
wards, with  as  little  violence  as  may  be,  to  the  actual  possessions 
and  supposed  rights  and  interests  of  various  orders  of  men,  ought 
to  be  the  object  of  all  agrarian  laws;  and  this  object  being  once 
distinctly  conceived,  if  wise  and  benevolent  men  will  turn  their 
attention  towards  it,  no  doubt  need  be  entertained  that  very 
practicable  methods  of  carrying  it  into  execution  will  in  time  be 
discovered,  by  comparison  of  projects,  or  from  the  result  of  trials. 

In  the  second  place,  Ogilvie  analyzes  the  price  paid  by  the 
purchaser  for  a  piece  of  land  into  three  parts,  each  of  which 
he  declares  to  be,  "the  value  of  a  distinct  subject,  the  sepa- 
rate amount  of  which  men  skilful  in  agriculture  and  ac- 
quainted with  the  soil  of  the  country  might  accurately  enough 
appreciate."    These  parts  are: 

(i)  The  original  value  of  the  soil,  or  that  which  it  might 
have  borne  in  its  natural  state,  prior  to  all  cultivation. 

(2)  The  accessory  or  improved  value  of  the  soil:  that,  to 
wit,  which  it  has  received  from  the  improvements  and  cultivation 
bestowed  on  it  by  the  last  proprietor,  and  those  who  have  pre- 
ceded him. 

(3)  The  contingent  or  improbable  value  of  the  soil:  that 
further  value  which  it  may  still  receive  from  future  cultiva- 
tion and  improvements,  over  and  above  defraying  the  expense 
of  making  such  improvements  —  or,  as  it  may  be  otherwise 
expressed,  the  value  of  an  exclusive  right  to  make  these 
improvements. 

On  the  basis  of  this  analysis  of  three  kinds  of  land  value 
Ogilvie  proceeds  to  discriminate  between  the  right  of  the 
individual  and  the  right  of  the  community  in  the  premises. 
He  holds  that  the  individual  has  a  full  right  to  the  entire 


fr 


■  i 


"If 


*  i;S 


I  hi 


252        The  Principles  of  Natural  Taxation 

accessory  or  improved  value.  To  the  original  value,  and  the 
contingent  or  improvable  value,  however,  the  individual  has 
only  a  limited  right,  viz.,  a  right  to  such  portion  of  these  values 
as  would  fall  to  his  share  on  an  equal  division  of  the  land 
among  all  members  of  society.  His  statement  of  the  respective 
rights  of  individual  and  society  is  as  follows : 

The  estate  of  every  landholder  may,  while  he  possesses  it, 
be  considered  as  capable  of  being  analyzed  into  these  three 
component  parts:  and  could  the  value  of  each  be  separately 
ascertained  by  any  equitable  method  (as  by  the  verdict  of  an 
assize),  it  would  not  be  difficult  to  distinguish  the  nature  and 
the  extent  of  his  private  right,  and  of  that  right  also  which  still 
belongs  to  the  community,  in  those  fields  which  he  is  permitted, 
under  the  protection  of  municipal  law,  to  possess.  He  must  be 
allowed  to  have  a  full  and  absolute  right  to  the  original,  the 
improved,  and  contingent  value  of  such  portion  of  his  estate 
as  would  fall  to  his  share  on  an  equal  partition  of  the  territory 
of  the  State  among  the  citizens.  Over  all  the  surplus  extent  of 
his  estate  he  has  a  full  right  to  the  whole  accessory  value,  whether 
he  has  been  the  original  improver  himself,  or  has  succeeded  to 
or  purchased  from  the  heirs  or  assignees  of  such  improver.  But 
to  the  original  and  contingent  value  of  this  surplus  extent  he 
has  no  full  right.  That  must  still  reside  in  the  community  at 
large,  and,  though  seemingly  neglected  or  relinquished,  may  be 
claimed  at  pleasure  by  the  legislature,  or  by  the  magistrate,  who 
is  the  public  trustee. 

Underlying  Ogilvie's  suggestions  or  proposals  for  recon- 
struction of  the  land  system  is  his  belief  that  the  prosperity 
of  the  State  lies  in  the  encouragement  of  agriculture  rather 
than  in  the  development  of  manufactures.  He  shares  the 
physiocratic  notion  that  labor  applied  to  agriculture  is  more 
productive  than  labor  applied  in  manufactures. 

The  labor  of  men  applied  to  the  cuUivation  of  the  earth  tends 
more  to  increase  the  public  wealth,  for  it  is  more  productive  of 
things  necessary  for  the  accommodation  of  life,  wherein  all  real 


Appendix 


253 


wealth  consists,  than  if  it  were  applied  to  any  other  purpose: 
and  all  labor  applied  to  refined  and  commercial  arts,  while  the 
State  can  furnish  or  procure  opportunities  of  applying  it  to  the 
cultivation  of  the  soil,  may  be  said  to  be  squandered  and  mis- 
applied, unless  in  so  far  as  it  is  given  to  those  liberal  arts,  whose 
productions  operate  on  the  mind,  and  rouse  the  fancy  or  the 
heart. 

He  is  of  the  further  opinion  that  the  well-being  of  the 
population  also  demands  the  encouragement  of  agriculture. 
He  holds  that  the — 

best,  plainest,  and  most  eflFectual  plan  which  any  government 
can  pursue  for  increasing  the  happiness  and  the  numbers  of  its 
people  is  to  increase  the  number  of  independent  cultivators,  to 
facilitate  their  establishment,  and  to  bring  into  that  favorable 
situation  as  great  a  number  of  citizens  as  the  extent  of  its  terri- 
tory will  admit Of  two  nations  equal  in  extent  of  terri- 
tory and  in  number  of  citizens,  that  may  be  accounted  the 
happiest  in  which  the  number  of  independent  cultivators  is  the 
greatest. 

He  holds  that  there  is  a  current  issue  between  the  demands 
of  national  prosperity  which  call  for  encouragement  of  inde- 
pendent cultivation,  and  the  implications  of  natural  rights 
which  point  to  equal  division  of  the  soil. 

Any  given  country  [he  reasons]  will  then  have  the  greatest 
possible  number  of  independent  cultivators,  when  each  individual 
of  mature  age  shall  be  possessed  of  an  equal  share  of  the  soil ; 
and  in  such  country  the  common  measure  or  standard  of  happiness 
will  probably  have  reached  its  highest  degree. 

Whether,  therefore,  we  inquire  into  the  natural  rights  and 
privileges  of  men,  or  consult  for  the  best  interests  of  the  greater 
number,  the  same  practical  regulations  for  the  economy  of 
property  in  land  seem  to  result  from  either  inquiry. 

Ogilvie  thus  treats  the  land  question  with  reference  only  to 
agricultural  interests.  He  did  not  touch  the  problem  of  urban 
rents.    His  sole  aim  was  to  encourage  independent  cultivation 


.  r 


l\ 


1  ' 


u 


, 


■f-^ 


254         The  Principles  of  Natural  Taxation 

by  diffusing  land  ownership  as  largely  as  possible  throughout 
the  population.  He  believed  that  by  reforms  so  aimed  the 
original  right  of  occupancy  and  the  acquired  right  of  labor 
might  be  reconciled,  or  that  the  land  system  of  the  present 
might  be  brought  into  closer  agreement  with  these  two  rights. 
The  fundamental  purpose  of  his  recommendations  is  the  diffu- 
sion of  land  ownership  in  the  interest  of  independent  cultiva- 
tion, rather  than  the  taxation  of  rent  in  the  interest  of  social 
justice. 

The  land  taxes  proposed  by  Ogilvie  were  as  follows :  the 
special  taxation  of  large  farms  and  short  leases;  taxation 
of  barren  lands  in  order  to  promote  their  improved  cultivation ; 
taxation  of  all  increase  of  rents,  even  to  the  amount  of 
one-half. 

(i)  Ogilvie  advises  us  to  work  toward  an  ultimate  ideal 
by  following  the  lines  of  least  resistance : 

Without  venturing  to  make  openly  any  alteration  in  that 
system  of  landed  property,  which,  like  systems  of  corrupted 
religion,  is  regarded  with  superstitious  reverence  in  countries 
where  it  has  long  obtained,  many  occasions  will  occur,  whereof 
advantage  may  be  taken  to  introduce,  under  the  cover  of  other 
objects,  and  as  part  of  the  usual  proceedings  of  the  State,  such 
regulations  as  may  tend  very  effectually,  though  by  remote  and 
indirect  influence,  to  promote  the  independence  of  the  plow, 
and  the  distribution  of  property  in  land,  in  small  allotments, 
among  the  lowest  ranks  of  the  people. 

(2)  In  the  following  is  an  intimation  that  if  we  cannot 
destroy  we  may  clip  the  wings  of  privilege : 

If,  for  example,  new  taxes  are  to  be  levied,  what  subjects  of 
taxation  can  be  more  justly  liable  to  the  imposition,  or  more 
productive,  than  large  farms  and  short  leases?  The  landlord, 
by  adopting  these  plans  in  the  management  of  his  estate,  means 
to  derive  advantage  to  himself,  from  measures  which  at  once 


Appendix 


255 


obstruct  the  increase  in  population  and  diminish  the  spirit  and 
independence  of  the  common  people;  and  if  his  right  to  make 
these  invasions  on  the  public  good  cannot  be  directly  attacked, 
let  him  at  least  be  obliged  to  indemnify  the  public  in  some  degree, 
by  some  other  mode,  more  familiar  to  the  minds  of  men. 

(3)  Here  is  the  "single  tax"  abolishing  speculation  in 
land : 

A  tax  imposed  on  barren  lands,  and  so  regulated  as  to  engage 
the  proprietor  in  their  immediate  cultivation,  or  oblige  him  to 
resign  them  to  the  community  for  general  distribution,  could 
not  be  esteemed  in  the  smallest  degree  unjust.  His  right  to  these 
barren  lands  is  founded  solely  on  occupation;  there  is  no  im- 
proved value  superadded,  no  right  accruing  from  labor  bestowed, 
and  as  he  occupies,  besides,  more  than  his  equal  share  of  the 
soil,  the  whole  unimproved  tracts  of  his  estate  belong  strictly 
and  entirely  to  the  public ;  and  no  small  indulgence  is  shown  in 
giving  him  an  option  to  improve  or  to  resign  them. 

(4)  Here  is  John  Stuart  Mill's  proposition  to  tax  the 
"  future  unearned  increment "  almost  in  an  inspired  prophecy 
of  the  modern  German  and  British  movement: 

A  tax  on  all  augmentation  of  rents,  even  to  the  extent  of 
one-half  the  increase,  would  be  at  once  the  most  equitable,  the 
most  productive,  the  most  easily  collected,  and  the  least  liable 
to  evasion  of  all  possible  taxes,  and  might  with  inconceivable 
advantage  disencumber  a  great  nation  from  all  those  injudicious 
imposts  by  which  its  commercial  exchanges  are  retarded  and 
restrained,'  and  its  domestic  manufactures  embarrassed. 

(5)  Here  Ogilvie  almost  reaches  the  concept  of  rent  and 
land  value  as  a  social  product : 

The  original  value  of  the  soil  is,  in  such  states,  in  fact, 
treated  as  a  fund  belonging  to  the  public,  and  merely  deposited 
in  the  hands  of  great  proprietors,  to  be,  by  the  imposition  of 
land  taxes,  gradually  applied  to  the  public  use,  and  which  may 
be  justly  drawn  from  them,  as  the  public  occasions  require. 


If 


i 


256         The  Principles  of  Natural  Taxation 

until  the  whole  be  exhausted.  Equity,  however,  requires  that 
from  such  land  taxes  those  small  tenements  which  do  not  exceed 
the  proprietor's  natural  share  of  the  soil  should  be  exempted. 
To  separate  the  contingent  value  from  the  other  two  is  less  diffi- 
cult, and  of  more  importance ;  for  the  detriment  which  the 
public  suffers  by  neglecting  this  separation,  and  permitting  an 
exclusive  right  of  improving  the  soil  to  accumulate  in  the  hands 
of  a  small  part  of  the  community,  is  far  greater,  in  respect  both 
of  the  progress  of  agriculture  and  the  comfortable  independence 
of  the  lower  ranks. 

(6)  And  finally  here  is  the  very  essence  of  the  proposi- 
tion for  the  single  tax : 

Without  regard  to  the  original  value  of  the  soil,  the  gross 
amount  of  property  in  land  is  the  fittest  subject  of  taxation; 
and,  could  it  be  made  to  support  the  whole  expense  of  the  public, 
great  advantage  would  arise  to  all  orders  of  men.  What  then, 
it  may  be  said,  would  not  in  that  case  the  proprietors  of  stock  in 
trade,  in  manufacture  and  arts,  escape  taxation,  that  is,  the 
proprietors  of  one-half  the  national  income?  They  would,  in- 
deed, be  so  exempted,  and  very  justly  and  very  profitably  for 
the  State;  for  it  accords  with  the  best  interests  of  the  com- 
munity, through  successive  generations,  that  active  progressive 
industry  should  be  exempted,  if  possible,  from  every  public 
burden,  and  that  the  whole  weight  should  be  laid  on  that  quiescent 
stock,  which  has  been  formerly  accumulated,  as  the  reward  of 
an  industry  which  is  now  no  longer  exerted. 

Ogilvie  framed  a  formal  proposal,  lengthy  and  minute,  of 
a  progressive  agrarian  law  for  a  new  and  better  allotment  of 
the  land.  His  other  writings  display  remarkable  insight  into 
underlying  principles  and  foresight  of  the  course  that  it  has 
taken  a  century  to  embody  into  statute. 

The  foregoing  surnming-up  by  Ogilvie  for  the  defense  of 
his  land-tax  proposals  is  worthy  of  careful  study.  He  pre- 
sents the  formula,  hallowed  by  experience  before  and  after, 
that  the  best  way  to  work  toward  an  ultimate  ideal  is  by 


Appendix 


257 


following  the  line  of  least  resistance.  His  taxation  of  large 
farms  contained  the  suggestion  that  although  we  cannot  de- 
stroy we  may  begin  thus  to  clip  the  wings  of  privilege.  No 
modern  economist  has  made  plainer  the  proposition  to  tax 
the  future  unearned  increment.  In  his  proposal  to  treat  rent 
as  a  public  fund,  to  be  gradually  applied  to  public  use  by  the 
imposition  of  land  taxes,  is  found  the  very  essence  and  flower 
of  the  single  tax  of  Henry  George  and  Thomas  G.  Shearman. 
He  foresaw  large  social  benefits  in  the  way  of  a  healthier  and 
more  virtuous  community  freed  from  poverty  and  war,  and 
the  stimulated  industry  and  commerce  which  were  to  follow 
his  prescriptions.  Finally,  his  enumeration  of  the  moral  bene- 
fits to  accrue  to  mankind  from  a  realization  of  his  fiscal  ideal 
is  a  brilliant  prognostication  that  no  later  and  greater  eco- 
nomic light  has  sufficed  to  dim. 

But  Ogilvie's  failure  to  grasp  the  full  significance  of  eco- 
nomic rent,  especially  urban  rent,  as  a  social  product,  and 
the  stress  laid  by  him  on  his  proposed  agrarian  law,  a  plan 
devoted  to  a  now  admittedly  impossible  mechanical  allot- 
ment of  land ;  are  responsible  for  his  being  relegated  from  the 
Authorities  to  the  Appendix. 


If 


1      !* 


tl 


ht-ii' 


258        The  Principles  of  Natural  Taxation 


Appendix 


259 


I- 


I 

TO 


IV 


Thomas  Paine,  1737-1809 

THOMAS  PAINE  was  bom  at  Thetford,  England,  in  1737. 
He  came  to  America  thirty-seven  years  later,  settling  in 
Philadelphia,  where  he  entered  journalism.  He  was  active 
in  the  War  of  Independence,  and  in  1777  was  made  Secretary 
of  the  Committee  of  Foreign  Affairs.  He  left  America  in 
1787  to  visit  Paris  and  London.  In  London  he  published  his 
Rights  of  Man,  written  in  1792  as  a  reply  to  Burke*s  Reflec- 
tions on  the  French  Revolution,  He  was  elected  to  the  Con- 
vention in  Paris,  and  also  to  the  committee  for  framing  a 
new  constitution.  In  1794  he  was  imprisoned  for  a  time  by 
the  revolutionary  extremists,  but  finally  returned  to  America 
in  1802  and  lived  in  New  York  City  till  his  death  in  1809. 

Paine  had  an  extraordinarily  acute  and  original  mind 
which  illuminated  every  problem  on  which  he  turned  it.  His 
attention  was  called  to  land  taxation  through  the  French  com- 
munistic movement,  led  by  Babeuf.  This  agitation  was  sup- 
pressed and  the  leader  executed  in  1796.  During  the  winter 
of  1795-96  Paine  wrote  his  pamphlet  on  agrarian  justice,  in 
which  he  proposed  a  novel  remedy  for  poverty.  This  pam- 
phlet appeared  first  in  Paris,  1797,  with  the  title:  "Thomas 
Payne,  d  la  Legislateur  et  au  Directoire.  Ou  la  Justice  Agraire 
opposee  d  la  Loi  Agraire,  et  aux  privileges  agraires.  Prix  15 
sols.  A  Paris,  chez  la  citoyenne  Ragouleau,  pres  le  Theatre 
de  la  Republique,  No.  229.  Et  chez  les  Marchands  de 
Nouveautes." 


The  scheme  outlined  briefly  in  this  essay  might  be  charac- 
terized as  a  plan  for  the  endowment  of  old  age,  to  be  financed 
through  a  tax  on  ground  rent.  Paine's  proposals  are  strongly 
prophetic  of  the  policy  embodied  in  the  British  Old  Age  Pen- 
sion Act  of  1908  and  the  Budget  of  19 10.  The  principle  of 
this  policy  is  the  same  as  that  underlying  Paine's  scheme.  The 
idea  is  to  tax  land  values  and  to  use  the  proceeds  for  the 
abolition  of  poverty. 

In  the  author's  Inscription,  prefaced  to  the  essay,  Paine 
distinguishes  two  kinds  of  property,  natural  and  artificial. 
Natural  property  is  that  which  comes  to  us  from  the  Creator 
of  the  universe,  such  as  earth,  air,  water.  Artificial  property 
is  acquired  property,  the  invention  of  men.  Paine  points 
out  that  equality  of  acquired  property  is  impossible.  To  dis- 
tribute it  equitably  would  require  that  all  should  have  contrib- 
uted in  the  same  proportion,  which  can  never  be.  Equality 
may  be  attained,  however,  in  the  case  of  natural  property. 
"Every  individual  in  the  world,"  Paine  maintains,  "is  born 
with  legitimate  claims  to  a  certain  kind  of  property,  or  its 
equivalent." 

The  real  starting-point  of  Paine's  argument  is  the  alleged 
common  right  to  land.  "  It  is  a  position  not  to  be  contro- 
verted," he  states,  "that  the  earth,  in  its  natural  uncultivated 
state,  was,  and  ever  would  have  continued  to  be,  the  common 
property  of  the  human  race."  Paine  recognizes,  however,  the 
right  of  individual  property  in  improvements  made  on  the  land. 
Moreover,  he  perceives  that  it  is  impossible  to  separate  these 
from  the  soil  itself.  This  fact  brought  about  individual  owner- 
ship of  land.  When  cultivation  began  and  the  results  of 
individual  labor  were  put  into  the  soil,  the  right  of  private 
ownership  necessarily  came  to  be  recognized.  Historically, 
Paine  finds  that  the  beginning  of  landed  property  was  contem- 


h'» 


!     5 


i       r 


! 


260        The  Principles  of  Natural  Taxation 

poraneous  with  the  rise  of  agriculture.     Private  property  in 
land  was  unknown  in  the  early  hunter  and  pastoral  stages. 
This  view  is  set  forth  in  the  following: 

There  could  be  no  such  thing  as  landed  property  originally. 
Man  did  not  make  the  earth,  and,  though  he  had  a  natural  right 
to  occupy  it,  he  had  no  right  to  locate  as  his  property  in  per- 
petuity any  part  of  it;  neither  did  the  creator  of  the  earth  open 
a  land-ofifice,  from  whence  the  first  title-deeds  should  issue. 
Whence,  then,  arose  the  idea  of  landed  property?  I  answer  as 
before,  that  when  cultivation  began  the  idea  of  landed  property 
began  with  it,  from  the  impossibility  of  separating  the  improve- 
ment made  by  cultivation  from  the  earth  itself,  upon  which  that 
improvement  was  made.  The  value  of  the  improvement  so  far 
exceeded  the  value  of  the  natural  earth,  at  that  time,  as  to  absorb 
it,  till,  in  the  end,  the  common  right  of  all  became  confounded 
into  the  cultivated  right  of  the  individual.  But  there  are,  never- 
theless, distinct  species  of  rights,  and  will  continue  to  be  so  long 
as  the  earth  endures.^ 

Notwithstanding  this  practical  necessity  for  landed  prop- 
erty, it  nevertheless  remains  true,  Paine  contended,  that  it  is 
the  value  of  the  improvements  only,  and  not  the  earth  itself, 
that  is  individual  property.  "  Every  proprietor  of  cultivated 
land,'*  he  concludes,  "therefore  owes  to  the  community  a 
ground  rent  (for  I  know  of  no  better  term  to  express  the  idea) 
for  the  land  which  he  holds."  Here  Paine  distinguishes  the 
two  kinds  of  land  value,  the  original  or  natural  value  of  land 
in  its  uncultivated  state,  and  the  value  of  the  improvements 
made  by  cultivation.  He  fails  to  see  the  site  value  due  to  the 
growth  and  activities  of  the  community,  as  distinguished  from 
the  effort  and  enterprise  of  the  individual  cultivator.  William 
Ogilvie  pursued  the  analysis  of  land  value  at  this  point  further 
than  Paine.     He  recognized,  in  addition  to  original  or  im- 

^  Political  Works  of  Thomas  Paine,  published  by  Peter  Eckler,  New 
York,  1891. 


Appendix 


261 


proved  value,  a  contingent  or  improvable  value  of  the  soil. 
Paine's  analysis  of  land  value  is  thus  partial  and  superficial. 

In  dealing  with  land,  the  State,  in  Paine's  opinion,  should 
seek  to  retain  the  individual  property  in  improvement  value 
while  restoring  the  common  property  in  original  values.  The 
solution  of  this  problem  which  he  proposed  called  for  the 
creation  of  a  national  fund,  by  taxation,  out  of  which  pay- 
ments should  be  made  to  the  citizens.  ( i )  There  should  be 
paid  to  every  person,  on  reaching  the  age  of  twenty-one  years, 
the  sum  of  fifteen  pounds  sterling  as  partial  compensation  for 
the  loss  of  his  natural  inheritance  of  the  land  through  the 
introduction  of  a  system  of  private  land  ownership.  (2)  There 
should  be  paid  to  every  person,  on  reaching  the  age  of  fifty 
years,  the  sum  of  ten  pounds  annually  during  the  remainder 
of  his  life. 

The  fund  would  be  accumulated  by  taking  one-tenth  of  the 
value  of  property  reverting  annually  by  death  to  direct  heirs, 
and  two-tenths  of  property  so  reverting  to  indirect  heirs. 
Paine  assumes  that  thirty  years  is  the  average  period  of  the 
complete  devolution  of  property  by  descent,  that  is,  of  its 
transmission  by  death  to  new  owners.  Accordingly,  on  the 
average,  one-thirtieth  of  the  value  of  property  would  be  pass- 
ing each  year  by  death  to  new  possessors.  This  one-thirtieth 
of  the  value  of  property  would  be  the  basis  for  levying  tithes 
to  accumulate  the  endowment  fund. 

It  should  be  noted  that  Paine  would  include  personal 
property  as  well  as  landed  property  in  the  valuation.  He  holds 
that  personal  property  is  the  effect  of  society,  since  he  thinks 
it  is  impossible  for  the  individual  to  acquire  personal  property 
without  the  aid  of  society.  He  would  therefore  levy  tithes  for 
his  endowment  funds  upon  personal  as  well  as  landed  estate. 

This  unique  scheme  is  characterized  by  Paine  as  a  new 


i' 


i 


262        The  Principles  of  Natural  Taxation 

system  of  civilization,  designed  to  supplement  the  new  system 
of  government  introduced  by  the  French  Revolution.  In 
closing  his  essay  he  remarks  concerning  the  social  significance 
of  this  proposal : 

It  is  a  revolution  in  the  state  of  civilization  that  will  give 
perfection  to  the  revolution  of  France.  Already  the  conviction 
that  government  by  representation  is  the  true  system  of  govern- 
ment is  spreading  itself  fast  in  the  world.  The  reasonableness 
of  it  can  be  seen  by  all.  The  justice  of  it  makes  itself  felt  even 
by  its  opposers.  But  when  a  system  of  civilization,  growing  out 
of  that  system  of  government,  shall  be  so  organized  that  not  a 
man  or  woman  born  in  the  Republic  but  shall  inherit  some  means 
of  beginning  the  world,  and  see  before  them  the  certainty  of 
escaping  the  miseries  that  under  other  governments  accompany 
old  age,  the  revolution  of  France  will  have  an  advocate  and  an 
ally  in  the  heart  of  all  nations. 

An  army  of  principles  will  penetrate  where  an  army  of  sol- 
diers cannot ;  it  will  succeed  where  diplomatic  management  would 
fail  •  it  is  neither  the  Rhine,  the  Channel,  nor  the  Ocean  that 
can  arrest  its  progress;  it  will  march  on  the  horizon  of  the 
world,  and  it  will  conquer. 

In  Paine's  proposition  we  find  little  in  common  with  the 
modern  single-tax  movement.  He  based  his  reform  upon  the 
doctrine  of  the  equal  rights  to  land.  In  common  with  the 
modern  movement,  he  recognized  the  necessity  of  exclusive 
private  "possession"  of  the  soil  in  the  interest  of  its  efficient 
utilization,  and  he  also  recognized  the  full  individual  property 
rights  in  improvements.  Finally,  he  would  make  the  appro- 
priation of  ground  rent  by  the  community  an  offset  for  the 
surrender  of  "equal  rights,"  here  again  anticipating  Henry 
George's  line  of  thought.  There  are,  therefore,  some  resem- 
blances, but  the  differences  are  radical.  While  distinguishing 
between  "original"  and  "improvement"  values  in  land,  he 
shows  no  understanding  of  the  true  nature  of  the  original 


Appendix 


263 


value  as  a  social  product,  and  hence  cannot  rest  his  claim  to 
the  joint  right  of  the  community  to  ground  rent  on  this  basis. 
The  revenue  was  to  be  collected  by  the  device  of  an  inherit- 
ance tax  on  both  land  and  personal  property,  herein  differing 
widely  both  in  method  and  principle  from  the  present  proposi- 
tion ;  it  was  to  be  merely  one  item  in  a  general  revenue  system, 
and  not  a  "single"  tax;  and,  when  collected,  it  was  not  to 
be  used  for  general  government  expenses,  but,  in  supposedly 
logical  fulfilment  of  its  origin  in  equal  rights  to  land,  it  was 
to  be  distributed  among  the  individual  members  of  the  com- 
munity in  endowments  and  pensions,  as  a  recompense  for  the 
surrender  of  these  rights.  Paine*s  thought  here  somewhat 
resembles  that  of  Thomas  Spence. 

It  might  be  proper  to  remark  that  had  Paine's  views  on 
property  been  acceptable  to  authority,  his  views  on  religion 
(which  do  not  now  seem  to  thinking  persons  heretical)  would 
not  have  come  in  for  much  abuse. 


>i 


f 


264        The  Principles  of  Natural  Taxation 


Appendix 


265 


Herbert  Spencer,  1820-1903 

TTERBERT  SPENCER  was  born  at  Derby,  England,  in 
-■•  -*•  1820,  and  died  in  1903.  He  was  the  son  of  a  school- 
master, and  received  his  early  education  from  his  father  and 
an  uncle,  Rev.  Thomas  Spencer.  The  offer  of  a  university 
training  he  declined,  and  was  mainly  self-taught  in  the  higher 
scientific  and  philosophical  subjects.  In  1837  he  became  a 
civil  engineer,  and  for  the  next  nine  years  was  engaged  in 
railroad  engineering.  Abandoning  that  profession  in  1846, 
he  devoted  himself  to  literary  and  philosophical  pursuits.  From 
1848  to  1853  he  was  assistant  editor  of  the  Economist,  and 
during  this  period  began  to  contribute  articles  to  the  West- 
minster Review.  In  1855  he  published  his  Principles  of 
Psychology,  a  work  based  upon  the  doctrine  of  evolution, 
though  appearing  four  years  before  the  publication  of  Dar- 
win's Origin  of  Species.  In  i860  he  announced  his  great  work, 
A  System  of  Synthetic  Philosophy,  which  was  completed  in 
1897,  substantially  as  originally  planned.  Vol.  i  of  that  work 
treats  of  "First  Principles";  Vols.  11  and  iii,  of  "Principles 
of  Biology";  Vols,  iv  and  v,  of  "Principles  of  Psychology"; 
Vols.  VI,  VII,  and  viii,  of  "  Principles  of  Sociology  " ;  and  Vols. 
IX  and  X,  of  "  Principles  of  Morality  or  of  Ethics."  In  spite 
of  poor  health  Spencer  found  time  to  write  numerous  essays 
and  various  works  on  educational,  sociological,  political,  and 
scientific  subjects.  The  influence  of  his  writings  extended  to 
almost  every  branch  of  knowledge,  but  his  position  in  the 


history  of  thought  will  probably  be  that  of  the  leading  philo- 
sophical exponent  of  the  doctrine  of  evolution.^ 

Spencer's  Social  Statics,  published  in  1850,  was  his  first 
important  work.  As  its  subtitle  indicates,  it  is  an  inquiry 
into  "the  conditions  essential  to  human  happiness."  Starting 
with  the  doctrine  of  the  existence  of  the  moral  sense,  Spencer 
seeks  to  find  "  a  proper  basis  for  a  systematic  morality."  Such 
a  morality  must  be  the  law  of  the  perfect  man,  a  code  of  rules 
for  the  behavior  of  men,  not  as  they  are,  but  as  they  should 
be;  one  which  determines  the  relationships  in  which  men 
ought  to  stand  to  each  other,  and  states  the  conditions  under 
which  perfect  human  beings  might  harmoniously  combine  in 
a  normal,  or  perfect,  society.  Obviously,  such  a  moral  system 
may  be  termed  "  the  science  of  social  life." 

As  this  definition  of  morality  implies,  Spencer  believes  in 
the  perfectibility  of  man — that  is,  in  human  progress.  What 
we  call  evil,  results  from  the  imperfect  adjustment  or  adapta- 
tion of  man  to  the  conditions  under  which  he  lives.  Civiliza- 
tion is  merely  the  process  of  adaptation  by  which  primitive 
man  has  been  fitted  for  the  present  social  state;  progress  is 
the  series  of  changes  by  which  better  adaptation  is  attained; 
and  human  perfectibility  means  merely  the  capability  of  man 
to  become  completely  suited,  perfectly  adapted,  to  the  highest 
social  existence.  Progress,  therefore,  is  not  an  accident,  but 
a  natural  process,  even  a  necessity — "  all  of  a  piece  with  the  de- 
velopment of  an  embryo  or  the  unfolding  of  a  flower."  Just  — 

as  surely  as  there  is  any  efiicacy  in  educational  culture,  or  any 
meaning  in  such  terms  as  habit,  custom,  practice;  so  surely  must 
the  human  faculties  be  moulded  into  complete  fitness  for  the  social 
state ;  so  surely  must  the  things  we  call  evil  and  immorality  dis- 
appear; so  surely  must  man  become  perfect. 

^  *  See  Encyclopcedia  Britannica,  xxv,  634,  nth  ed. ;  Herbert  Spencer, 
Autobiography,  published  posthumously,  in  1904. 


11 


i ' 


u 


266        The  Principles  of  Natural  Taxation 

The  greatest  happiness  of  mankind  is  the  divine  purpose. 
It  is  for  man  to  discover  the  conditions  under  which,  or  by 
conforming  to  which,  this  greatest  happiness  may  be  attained. 
Since  man  must  live  in  a  social  state,  the  activity  of  each 
individual  is  limited  by  the  spheres  of  activity  of  others.  It 
follows,  then,  that  the  greatest  sum  of  happiness  can  be  real- 
ized only  by  men  each  of  whom  can  obtain  complete  happiness 
within  his  own  sphere  of  activity  without  diminishing  the 
spheres  required  by  others.  The  fulfilment  of  this  condition 
constitutes  justice;  justice,  therefore,  is  the  all-essential  requi- 
site for  a  normal  social  existence.  Upon  this  view  of  the 
necessary  conditions  of  the  greatest  happiness,  Spencer  bases 
his  subsequent  discussion  of  the  adaptations,  or  modes  of 
conduct,  by  which  mankind  can  hope  to  attain  a  perfect  social 
state. 

The  first  principle  of  morality  Spencer  finds  to  be  that 
"every  man  has  freedom  to  do  all  that  he  wills,  provided  he 
infringes  not  the  equal  freedom  of  any  other  man";  and  the 
rest  of  the  volume  is  devoted  to  the  development  of  this  prin- 
ciple into  a  system  of  equity.  Accordingly,  after  considering 
the  rights  of  life  and  personal  liberty,  he  comes  to  the  right 
to  the  use  of  the  earth.  His  discussion  of  this  merits  repro- 
duction in  full.^ 

I.  Given  a  race  of  beings  having  like  claims  to  pursue  the 
objects  of  their  desires  —  given  a  world  adapted  to  the  grati- 
fication of  those  desires  —  a  world  into  which  such  beings  are 
similarly  born,  and  it  unavoidably  follows  that  they  have  equal 
rights  to  the  use  of  this  world.  For  if  each  of  them  "  has  free- 
dom to  do  all  that  he  wills,  provided  he  infringes  not  the  equal 
freedom  of  any  other,"  then  each  of  them  is  free  to  use  the  earth 
for  the  satisfaction  of  his  wants,  provided  he  allows  all  others 
the  same  liberty.    And,  conversely,  it  is  manifest  that  no  one,  or 

*  Social  Statics,  chap.  ix. 


Appendix 


267 


part  of  them,  may  use  the  earth  in  such  a  way  as  to  prevent  the 
rest  from  similarly  using  it ;  seeing  that  to  do  this  is  to  assume 
greater  freedom  than  the  rest,  and  consequently  to  break  the  law. 

2.  Equity,  therefore,  does  not  permit  property  in  land.  For 
if  one  portion  of  the  earth's  surface  may  justly  become  the  pos- 
session of  an  individual,  and  may  be  held  by  him  for  his  sole  use 
and  benefit,  as  a  thing  to  which  he  has  an  exclusive  right,  then 
other  portions  of  the  earth's  surface  may  be  so  held;  and  even- 
tually the  whole  of  the  earth's  surface  may  be  so  held ;  and  our 
planet  may  thus  lapse  altogether  into  private  hands.  Observe 
now  the  dilemma  to  which  this  leads.  Supposing  the  entire 
habitable  globe  to  be  so  enclosed,  it  follows  that  if  the  landowners 
have  a  valid  right  to  its  surface,  all  who  are  not  landowners 
have  no  right  at  all  to  its  surface.  Hence,  such  can  exist  on 
the  earth  by  sufferance  only.  They  are  all  trespassers.  Save 
by  the  permission  of  the  lords  of  the  soil,  they  can  have  no  room 
for  the  soles  of  their  feet.  Nay,  should  the  others  think  fit  to 
deny  them  a  resting-place,  these  landless  men  might  equitably 
be  expelled  from  the  earth  altogether.  If,  then,  the  assumption 
that  land  can  be  held  as  property,  involves  that  the  whole  globe 
may  become  the  private  domain  of  a  part  of  its  inhabitants; 
and  if,  by  consequence,  the  rest  of  its  inhabitants  can  then  exer- 
cise their  faculties  —  can  then  exist,  even  —  only  by  consent  of 
the  landowners,  it  is  manifest  that  an  exclusive  possession  of  the 
soil  necessitates  an  infringement  of  the  law  of  equal  freedom. 
For  men  who  cannot  "live  and  move  and  have  their  being" 
without  the  leave  of  others,  cannot  be  equally  free  with  those 
others. 

3.  Passing  from  the  consideration  of  the  possible  to  that  of 
the  actual,  we  find  yet  further  reason  to  deny  the  rectitude  of 
property  in  land.  It  can  never  be  pretended  that  the  existing 
titles  to  such  property  are  legitimate.  Should  anyone  think  so, 
let  him  look  in  the  chronicles.  Violence,  fraud,  the  prerogative 
of  force,  the  claims  of  superior  cunning — these  are  the  sources 
to  which  those  titles  may  be  traced.  The  original  deeds  were 
written  with  the  sword,  rather  than  with  the  pen:  not  lawyers, 
but  soldiers,  were  the  conveyancers;  blows  were  the  current 
coin  given  in  payment ;  and  for  seals,  blood  was  used  in  prefer- 
ence to  wax.  Could  valid  claims  be  thus  constituted?  Hardly. 
And  if  not,  what  becomes  of  the  pretensions  of  all  subsequent 
holders  of  estates  so  obtained?    Does  sale  or  bequest  generate 


|! 


Ili 


■*' 


268        The  Principles  of  Natural  Taxation 

a  right  where  it  did  not  previously  exist?  Would  the  original 
claimants  be  nonsuited  at  the  bar  of  reason,  because  the  thing 
stolen  from  them  had  changed  hands?  Certainly  not.  And  if 
one  act  of  transfer  can  give  no  title,  can  many?  No:  though 
nothing  be  multiplied  forever,  it  will  not  produce  one.  Even  the 
law  recognizes  this  principle.  An  existing  holder  must,  if  called 
upon,  substantiate  the  claims  of  those  from  whom  he  purchased 
or  inherited  his  property;  and  any  flaw  in  the  original  parch- 
ment, even  though  the  property  should  have  had  a  score  inter- 
mediate owners,  quashes  his  right. 

"But  Time,"  say  some,  "is  a  great  legalizer.  Immemonal 
possession  must  be  taken  to  constitute  a  legitimate  claim.  That 
which  has  been  held  from  age  to  age  as  private  property,  and 
has  been  bought  and  sold  as  such,  must  now  be  considered  as 
irrevocably  belonging  to  individuals."  To  which  proposition  a 
willing  assent  shall  be  given  when  its  propounders  can  assign 
it  a  definite  meaning.  To  do  this,  however,  they  must  find  satis- 
factory answers  to  such  questions  as  —  How  long  does  it  take 
for  what  was  originally  a  wrong  to  grow  into  a  right f  At  what 
rate  per  annum  do  invalid  claims  become  valid?  If  a  title  gets 
perfect  in  a  thousand  years,  how  much  more  than  perfect  will 
it  be  in  two  thousand  years?— and  so  forth.  For  the  solution 
of  which  they  will  require  a  new  calculus. 

Whether  it  may  be  expedient  to  admit  claims  of  a  certain 
standing,  is  not  the  point.  We  have  here  nothing  to  do  with 
considerations  of  conventional  privilege  or  legislative  conven- 
ience. We  have  simply  to  inquire  what  is  the  verdict  given  by 
pure  equity  in  the  matter.  And  this  verdict  enjoins  a  protest 
against  every  existing  pretension  to  the  individual  possession  of 
the  soil ;  and  dictates  the  assertion  that  the  right  of  mankind  at 
large  to  the  earth's  surface  is  still  valid,  all  deeds,  customs,  and 
laws  notwithstanding.  ,  .  . 

4.  Not  only  have  present  land  tenures  and  indefensible  origin, 
but  it  is  impossible  to  discover  any  mode  in  which  land  can 
become  private  property.  Cultivation  is  commonly  considered 
to  give  a  legitimate  title.  He  who  has  reclaimed  a  tract  of  ground 
from  its  primitive  wilderness,  is  supposed  to  have  thereby  made 
it  his  own.  But  if  his  right  is  disputed,  by  what  systeni  of  logic 
can  he  vindicate  it?    Let  us  listen  a  moment  to  his  pleadings. 

"  Hello,  you,  Sir,"  cries  the  cosmopolite  to  some  backwoods- 
man, smoking  at  the  door  of  his  shanty ;  "  by  what  authority  do 


Appendix 


269 


you  take  possession  of  these  acres  that  you  have  cleared,  round 
which  you  have  put  a  snake-fence,  and  on  which  you  have  built 
this  log-house?" 

"  By  what  authority  ?  I  squatted  here  because  there  was  no 
one  to  say  nay — because  I  was  as  much  at  liberty  to  do  so  as 
any  other  man.  Besides,  now  that  I  have  cut  down  the  wood, 
and  plowed  and  cropped  the  ground,  this  farm  is  more  mine  than 
yours,  or  anybody's ;  and  I  mean  to  keep  it." 

"Ay,  so  you  all  say.  But  I  do  not  yet  see  how  you  have 
substantiated  your  claim.  When  you  came  here  you  found  the 
land  producing  trees  —  sugar-maples,  perhaps ;  or  may  be  it  was 
covered  with  prairie-grass  and  wild  strawberries.  Well,  instead 
of  these,  you  made  it  yield  wheat,  or  maize,  or  tobacco.  Now, 
I  want  to  understand  how,  by  exterminating  one  set  of  plants, 
and  making  the  soil  bear  another  set  in  their  place,  you  have 
constituted  yourself  lord  of  this  soil  for  all  succeeding  time." 

"  Oh,  those  natural  products  which  I  destroyed  were  little  or 
no  use ;  whereas  I  caused  the  earth  to  bring  forth  things  good  for 
food  —  things  that  help  to  give  life  and  happiness." 

"Still,  you  have  not  shown  why  such  a  process  makes  the 
portion  of  earth  you  have  so  modified  yours.  What  is  it  that 
you  have  done?  You  have  turned  over  the  soil  to  a  few  inches 
in  depth  with  a  spade  or  a  plow;  you  have  scattered  over  this 
prepared  surface  a  few  seeds ;  and  you  have  gathered  the  fruits 
which  the  sun,  rain,  and  air  helped  the  soil  to  produce.  Just  tell 
me,  if  you  please,  by  what  magic  have  these  acts  made  you  sole 
owner  of  that  vast  mass  of  matter,  having  for  its  base  the  sur- 
face of  your  estate,  and  for  its  apex  the  center  of  the  globe?  all 
of  which  it  appears  you  would  monopolize  to  yourself  and  your 
descendants  forever." 

"Well,  if  it  isn't  mine,  whose  is  it?  I  have  dispossessed 
nobody.  When  I  crossed  the  Mississippi  yonder,  I  found  nothing 
but  the  silent  woods.  If  someone  else  had  settled  here,  and  made 
this  clearing,  he  would  have  had  as  good  a  right  to  the  location 
as  I  have.  I  have  done  nothing  but  what  any  other  person  was 
at  liberty  to  do,  had  he  come  before  me.  While  they  were 
unreclaimed,  these  lands  belonged  to  all  men — as  much  to  one 
as  to  another — and  they  are  now  mine  simply  because  I  was  the 
first  to  discover  and  improve  them." 

"You  say  truly  when  you  say  that  'while  they  were  unre- 
claimed these  lands  belonged  to  all  men.'    And  it  is  my  duty  to 


.-!) 


\^' 


ijl  . 


270         The  Principles  of  Natural  Taxation 

tell  you  that  they  belong  to  all  men  still,  and  that  your  '  improve- 
ments/ as  you  call  them,  cannot  vitiate  the  claim  of  all  men. 
You  may  plow  and  harrow,  and  sow  and  reap;  you  may  turn 
over  the  soil  as  often  as  you  hke;  but  all  your  manipulations 
will  fail  to  make  that  soil  yours  which  was  not  yours  to  begin 
with.  Let  me  put  a  case.  Suppose,  now,  that  in  the  course  of 
your  wanderings  you  come  upon  an  empty  house  which,  in  spite 
of  its  dilapidated  state,  takes  your  fancy;  suppose  that  with 
the  intention  of  making  it  your  abode  you  expend  much  time  and 
trouble  in  repairing  it — that  you  paint  and  paper,  and  white- 
wash, and  at  considerable  cost  bring  it  into  a  habitable  state. 
Suppose,  further,  that  on  some  fatal  day  a  stranger  is  announced, 
who  turns  out  to  be  the  heir  to  whom  this  house  has  been  be- 
queathed; and  that  this  professed  heir  is  prepared  with  all  the 
necessary  proofs  of  his  identity :  what  becomes  of  your  improve- 
ments? Do  they  give  you  a  valid  title  to  the  house?  Do  they 
quash  the  title  of  the  original  claimant?" 

"  No." 

"Neither,  then,  do  your  pioneering  operations  give  you  a 
valid  title  to  this  land.  Neither  do  they  quash  the  title  of  its 
original  claimants  —  the  human  race.  The  world  is  God's  bequest 
to  mankind.  All  men  are  joint  heirs  to  it,  you  among  the 
number.  And  because  you  have  taken  up  your  residence  on  a 
certain  part  of  it,  and  have  subdued,  cultivated,  beautified  that 
part  —  improved  it,  as  you  say  —  you  are  not  therefore  war- 
ranted in  appropriating  it  as  entirely  private  property.  At  least, 
if  you  do  so,  you  may  at  any  moment  be  justly  expelled  by  the 
lawful  owner — Society." 

"Well,  but  surely  you  would  not  eject  me  without  making 
some  recompense  for  the  great  additional  value  I  have  given  to 
this  tract,  by  reducing  what  was  a  wilderness  into  fertile  fields. 
You  would  not  turn  me  adrift  and  deprive  me  of  all  the  benefit 
of  those  years  of  toil  it  has  cost  me  to  bring  this  spot  into  its 
present  state." 

"  Of  course  not :  just  as  in  the  case  of  the  house  you  would 
have  an  equitable  title  to  compensation  from  the  proprietor  for 
repairs  and  new  fittings,  so  the  community  cannot  justly  take 
possession  of  this  estate  without  paying  for  all  that  you  have 
done  for  it.  This  extra  worth  which  your  labor  has  imparted 
to  it  is  fairly  yours;  and  although  you  have,  without  leave, 
busied  yourself  in  bettering  what  belongs  to  the  community,  yet 


Appendix 


271 


no  doubt  the  community  will  duly  discharge  your  claim.  But 
admitting  this  is  quite  a  diflFerent  thing  from  recognizing  your 
right  to  the  land  itself.  It  may  be  true  that  you  are  entitled  to 
compensation  for  the  improvements  this  enclosure  has  received 
at  your  hands ;  and  at  the  same  time  it  may  be  equally  true  that 
no  act,  form,  proceeding,  or  ceremony  can  make  this  enclosure 
your  private  property." 

5.  It  does,  indeed,  at  first  sight  seem  possible  for  the  earth 
to  become  the  exclusive  possession  of  individuals  by  some  process 
of  equitable  distribution.  "  Why,"  it  may  be  asked,  "  should  not 
men  agree  to  a  fair  subdivision?  If  all  are  co-heirs,  why  may 
not  the  estate  be  equally  apportioned,  and  each  be  afterwards 
perfect  master  of  his  own  share  ?  " 

To  this  question  it  may,  in  the  first  place,  be  replied  that  such 
a  division  is  vetoed  by  the  difficulty  of  fixing  the  values  of  respec- 
tive tracts  of  land.  Variations  in  productiveness,  diflFerent  de- 
grees of  accessibility,  advantages  of  climate,  proximity  to  the 
centers  of  civilization  —  these,  and  other  such  considerations, 
remove  the  problem  out  of  the  sphere  of  mere  mensuration  into 
the  region  of  impossibility. 

?"^'  waiving  this,  let  us  inquire  who  are  to  be  the  allottees. 
Shall  adult  males,  and  all  who  have  reached  twenty-one  on  a 
specified  day,  be  the  fortunate  individuals?  If  so,  what  is  to 
be  done  with  those  who  come  of  age  on  the  morrow?  Is  it  pro- 
posed that  each  man,  woman,  and  child  shall  have  a  section? 
If  so,  what  becomes  of  all  who  are  to  be  born  next  year?  And 
what  will  be  the  fate  of  those  whose  fathers  sell  their  estates 
and  squander  the  proceeds?  These  portionless  ones  must  con- 
stitute a  class  already  described  as  having  no  right  to  a  resting- 
place  on  earth  — as  living  by  the  suflferance  of  their  fellow-men 

as  being  practically  serfs.  And  the  existence  of  such  a  class  is 
wholly  at  variance  with  the  law  of  equal  freedom. 

Until,  therefore,  we  can  produce  a  valid  commission  author- 
izing us  to  make  this  distribution  —  until  it  can  be  proved  that 
God  has  given  one  charter  of  privileges  to  one  generation,  and 
another  to  the  next  —  until  we  can  demonstrate  that  men  bom 
after  a  certain  date  are  doomed  to  slavery,  we  must  consider 
that  no  such  allotment  is  permissible. 

.  .^Probably  some  will  regard  the  difficulties  inseparable  from 
individual  ownership  of  the  soil,  as  caused  by  pushing  to  excess 
a  doctrine  applicable  only  within  rational  limits.    This  is  a  very 


272        The  Principles  of  Natural  Taxation 

favorite  style  of  thinking  with  some.  There  are  people  who  hate 
anything  in  the  shape  of  exact  conclusions;  and  these  are  of 
them.  According  to  such,  the  right  is  never  in  either  extreme, 
but  always  half  way  between  the  extremes.  They  are  continually 
trying  to  reconcile  Yes  and  No.  Ifs,  and  buts,  and  excepts  are 
their  delight.  They  have  so  great  a  faith  in  "the  judicious 
mean"  that  they  would  scarcely  believe  an  oracle  if  it  uttered 
a  full-length  principle.  Were  you  to  inquire  of  them  whether 
the  earth  turns  on  its  axis  from  east  to  west,  or  from  west  to 
east,  you  might  almost  expect  the  reply  —  "A  little  of  both,"  or, 
"  Not  exactly  either."  It  is  doubtful  whether  they  would  assent 
to  the  axiom  that  the  whole  is  greater  than  its  part,  without 
making  some  qualification.  They  have  a  passion  for  compromises. 
To  meet  their  taste.  Truth  must  always  be  spiced  with  a  little 
Error.  They  cannot  conceive  of  a  pure,  definite,  entire,  and 
unlimited  law.  And  hence,  in  discussions  like  the  present,  they 
are  constantly  petitioning  for  limitations  —  always  wishing  to 
abate,  and  modify,  and  moderate  —  ever  protesting  against  doc- 
trines being  pursued  to  their  ultimate  consequences. 

But  it  behooves  such  to  recollect  that  ethical  truth  is  as  exact 
and  as  peremptory  as  physical  truth ;  and  that  in  this  matter  of 
land-tenure  the  verdict  of  morality  must  be  distinctly  yea  or  nay. 
Either  men  have  a  right  to  make  the  soil  private  property,  or 
they  have  not.  There  is  no  medium.  We  must  choose  one  of 
the  two  positions.  There  can  be  no  half-and-half  opinion.  In 
the  nature  of  things  the  fact  must  be  either  one  way  or  the  other. 

If  men  have  not  such  a  right,  we  are  at  once  delivered 
from  the  several  predicaments  already  pointed  out.  If  they 
have  such  a  right,  then  is  the  right  absolute,  sacred,  not  on 
any  pretense  to  be  violated.  If  they  have  such  a  right,  then 
is  his  Grace  of  Leeds  justified  in  warning-oflF  tourists  from  Ben 
Mac  Dhui,  the  Duke  of  AthoU  in  closing  Glen  Tilt,  the  Duke  of 
Buccleugh  in  denying  sites  to  the  Free  Church,  and  the  Duke 
of  Sutheriand  in  banishing  the  Highlanders  to  make  room  for 
sheep-walks.  If  they  have  such  a  right,  then  it  would  be  proper 
for  the  sole  proprietor  of  any  kingdom  —  a  Jersey  or  Guernsey, 
for  example  — to  impose  just  what  regulations  he  might  choose 
on  its  inhabitants— to  tell  them  that  they  should  not  live  on  his 
property  unless  they  professed  a  certain  religion,  spoke  a  par- 
ticular language,  paid  him  a  specified  reverence,  adopted  an 
authorized  dress,  and  conformed  to  all  other  conditions  he  might 


Appendix 


273 


Ji 


see  fit  to  make.  If  they  have  such  a  right,  then  is  there  truth 
in  that  tenet  of  the  ultra-Tory  school,  that  the  landowners  are 
the  only  legitimate  rulers  of  a  country — that  the  people  at  large 
remain  in  it  only  by  the  landowners'  permission,  and  ought  conse- 
quently to  submit  to  the  landowners'  rule,  and  respect  whatever 
institutions  the  landowners  set  up.  There  is  no  escape  from 
these  inferences.  They  are  necessary  corollaries  to  the  theory 
that  the  earth  can  become  individual  property.  And  they  can 
only  be  repudiated  by  denying  that  theory. 

7.  After  all,  nobody  does  implicitly  believe  in  landlordism. 
We  hear  of  estates  being  held  under  the  king,  that  is,  the  State ;  or 
of  their  being  kept  in  trust  for  the  public  benefit ;  and  not  that  they 
are  the  inalienable  possessions  of  their  nominal  owners.  More- 
over, we  daily  deny  landlordism  by  our  legislation.  Is  a  canal, 
a  railway,  or  a  turnpike  road  to  be  made?  we  do  not  scruple 
to  seize  just  as  many  acres  as  may  be  requisite,  allowing  the 
holders  compensation  for  the  capital  invested.  We  do  not  wait 
for  consent.  An  Act  of  Parliament  supersedes  the  authority  of 
title  deeds,  and  serves  proprietors  with  notice  to  quit,  whether 
they  will  or  not.  Either  this  is  equitable,  or  it  is  not.  Either 
the  public  are  free  to  resume  as  much  of  the  earth's  surface  as 
they  think  fit,  or  the  titles  of  the  landowner's  must  be  considered 
absolute,  and  all  national  works  must  be  postponed  until  lords 
and  squires  please  to  part  with  the  requisite  slices  of  their  estates. 
If  we  decide  that  the  claims  of  individual  ownership  must  give 
way,  then  we  imply  that  the  right  of  the  nation  at  large  to  the 
soil  is  supreme  —  that  the  right  of  private  possession  only  exists 
by  general  consent  —  that  general  consent  being  withdrawn,  it 
ceases  —  or,  in  other  words,  that  it  is  no  right  at  all. 

8.  "  But  to  what  does  this  doctrine,  that  men  are  equally 
entitled  to  the  use  of  the  earth,  lead  ?  Must  we  return  to  the 
times  of  uninclosed  wilds,  and  subsist  on  roots,  berries,  and  game? 
Or  are  we  to  be  left  to  the  management  of  Messrs.  Fourrier, 
Owen,  Louis  Blanc,  and  Co.  ?  " 

Neither.  Such  a  doctrine  is  consistent  with  the  highest  state 
of  civilization,  may  be  carried  out  without  involving  a  commu- 
nity of  goods,  and  need  cause  no  very  serious  revolution  in  exist- 
ing arrangements.  The  change  required  would  simply  be  a 
change  of  landlords.  Separate  ownerships  would  merge  into  the 
joint-stock  ownership  of  the  public.  Instead  of  being  in  the 
possession  of  individuals,  the  country  would  be  held  by  the 


r 


n 


ic 


1 


274         The  Principles  of  Natural  Taxation 

great  corporate  body  —  Society.  Instead  of  leasing  his  acres 
from  an  isolated  proprietor,  the  farmer  would  lease  them  from 
the  nation.  Instead  of  paying  his  rent  to  the  agent  of  Sir  John 
or  his  Grace,  he  would  pay  it  to  an  agent  or  deputy-agent  of  the 
community.  Stewards  would  be  public  officials  instead  of  pri- 
vate ones,  and  tenancy  the  only  land  tenure. 

A  state  of  things  so  ordered  would  be  in  perfect  harmony 
with  the  moral  law.  Under  it  all  men  would  be  equally  land- 
lords ;  all  men  would  be  alike  free  to  become  tenants.  A,  B,  C, 
and  the  rest,  might  compete  for  a  vacant  farm  as  now,  and  one 
of  them  might  take  that  farm,  without  in  any  way  violating  the 
principles  of  pure  equity.  All  would  be  equally  free  to  bid;  all 
would  be  equally  free  to  refrain.  And  when  the  farm  had  been 
let  to  A,  B,  or  C,  all  parties  would  have  done  that  which  they 
willed  —  the  one  in  choosing  to  pay  a  given  sum  to  his  fellow- 
men  for  the  use  of  certain  lands  —  the  others,  in  refusing  to 
pay  that  sum.  Clearly,  therefore,  on  such  a  system  the  earth 
might  be  inclosed,  occupied,  and  cultivated,  in  entire  subordina- 
tion to  the  law  of  equal  freedom. 

9.  No  doubt  great  difficulties  must  attend  the  resumption, 
by  mankind  at  large,  of  their  rights  to  the  soil.  The  question  of 
compensation  to  existing  proprietors  is  a  complicated  one  —  one 
that  perhaps  cannot  be  settled  in  a  strictly  equitable  manner. 
Had  we  to  deal  with  the  parties  who  originally  robbed  the  human 
race  of  its  heritage,  we  might  make  short  work  of  the  matter. 
But,  unfortunately,  most  of  our  present  landowners  are  men 
who  have,  either  mediately  or  immediately  —  either  by  their  own 
acts  or  by  the  acts  of  their  ancestors  —  given,  for  their  estates, 
equivalents  of  honestly  earned  wealth,  believing  that  they  were 
investing  their  savings  in  a  legitimate  manner.  To  justly  esti- 
mate and  liquidate  the  claims  of  such,  is  one  of  the  most  intricate 
problems  society  will  one  day  have  to  solve.  But  with  this 
perplexity  and  our  extrication  from  it,  abstract  morality  has  no 
concern.  Men  having  got  themselves  into  the  dilemma  by  dis- 
obedience to  the  law,  must  get  out  of  it  as  well  as  they  can,  and 
with  as  little  injury  to  the  landed  class  as  may  be. 

Meanwhile,  we  shall  do  well  to  recollect  that  there  are  others 
besides  the  landed  class  to  be  considered.  In  our  tender  regard 
for  the  vested  interests  of  the  few,  let  us  not  forget  that  the 
rights  of  the  many  are  in  abeyance,  and  must  remain  so  as  long 
as  the  earth  is  monopolized  by  individuals.     Let  us  remember, 


Appendix 


275 


too,  that  the  injustice  thus  inflicted  on  the  mass  of  mankind  is 
an  injustice  of  the  gravest  nature.  The  fact  that  it  is  not  so 
regarded  proves  nothing.  In  early  phases  of  civilization,  even 
homicide  is  thought  lightly  of.  The  suttees  of  India,  together 
with  the  practice  elsewhere  followed  of  sacrificing  a  hecatomb 
of  human  victims  at  the  burial  of  a  chief,  show  this:  and 
probably  cannibals  consider  the  slaughter  of  those  whom  "the 
fortune  of  war"  has  made  their  prisoners,  perfectly  justifiable. 
It  was  once  also  universally  supposed  that  slavery  was  a  natural 
and  quite  legitimate  institution  —  a  condition  into  which  some 
were  bom,  and  to  which  they  ought  to  submit  as  to  a  Divine 
ordination;  nay,  indeed,  a  great  proportion  of  mankind  hold 
this  opinion  still.  A  higher  social  development,  however,  has 
generated  in  us  a  better  faith,  and  we  now  to  a  considerable 
extent  recognize  the  claims  of  humanity.  But  our  civilization 
is  only  partial.  It  may  by-and-by  be  perceived  that  Equity  utters 
dictates  to  which  we  have  not  yet  listened;  and  men  may  then 
learn  that  to  deprive  others  of  their  rights  to  the  use  of  the 
earth  is  to  commit  a  crime  inferior  only  in  wickedness  to  the 
crime  of  taking  away  their  lives  or  personal  liberties. 

10.  Briefly  reviewing  the  argument,  we  see  that  the  right 
of  each  man  to  the  use  of  the  earth,  limited  only  by  the  like 
rights  of  his  fellow-men,  is  immediately  deducible  from  the  law 
of  equal  freedom.  We  see  that  the  maintenance  of  this  right 
necessarily  forbids  private  property  in  land.  On  examination, 
all  existing  titles  to  such  property  turn  out  to  be  invalid,  those 
founded  on  reclamation  inclusive.  It  appears  that  not  even  an 
equal  apportionment  of  the  earth  among  its  inhabitants  could 
generate  a  legitimate  proprietorship.  We  find  that  if  pushed  to 
its  ultimate  consequences,  a  claim  to  exclusive  possession  of  the 
soil  involves  a  landowning  despotism.  We  further  find  that 
such  a  claim  is  constantly  denied  by  the  enactments  of  our  legis- 
lature. And  we  find,  lastly,  that  the  theory  of  the  co-heirship 
of  all  men  to  the  soil  is  consistent  with  the  highest  civilization; 
and  that,  however  difficult  it  may  be  to  embody  that  theory  in 
fact,  Equity  strictly  commands  it  to  be  done. 


Spencer's  Social  Statics,  it  will  be  seen,  discusses  the  land 
question  wholly  from  the  point  of  view  of  an  ethical  philoso- 
pher expounding  the  doctrine  of  equal  rights  —  in  this  case 


.!:( 


iii 


I 


B 


{I. 


276         The  Principles  of  Natural  Taxation 

the  equal  right  to  land.  He  betrays  no  knowledge  of  the  law 
of  economic  rent,  and  suggests  no  remedy  for  the  wrongs  he 
depicts,  but  a  form  of  land  nationalization.  It  was  at  this 
point  that  Mr.  George  completed  the  discussion  of  the  land 
question. 

Henry  George  had,  apparently,  no  knowledge  of  Social 
Statics  when  he  wrote  his  pamphlet  entitled  Our  Land  and 
Land  Policy,  in  187 1.  A  few  years  later  he  became  acquainted 
with  the  book,  and  referred  to  it  several  times  in  Progress 
and  Poverty,  published  in  1879.^  It  seems  clear  that  Mr. 
George's  earlier  thought  upon  the  land  question  was  pro- 
foundly influenced  by  Spencer's  doctrine  concerning  the  equal 
right  of  all  men  to  the  use  of  land.  He  rejected,  however, 
Spencer's  suggestion  of  land  nationalization,  substituting  the 
proposal  to  socialize  rent  through  a  single  tax  on  the  rental 
values  of  land.  As  he  developed  this  idea  he  was  led  by  his 
own  logic  further  and  further  away  from  Spencer's  doctrine 
of  the  equal  right  to  the  use  of  land.  More  and  more  he  came 
to  base  the  right  of  the  community  to  the  rent  of  land  upon 
the  cornerstone  that  economic  rent  is  the  product  of  the  activ- 
ity and  expenditure  of  the  community,  and  as  such  belongs 
to  its  creator — the  community.  For  Spencer's  equal  right 
to  land,  the  gift  of  nature,  Mr.  George  finally  substituted  the 
right  of  the  community  to  economic  rent,  the  product  of 
community  life  and  activity. 

A  few  years  later,  when  active  discussion  of  the  land 
problem  arose  in  England,  Mr.  Spencer  published  a  number 
of  letters  in  which,  as  it  seemed  to  Mr.  George,  he  virtually 
recanted  his  earlier  opinions.  Mr.  George  thereupon  pub- 
lished, in  1892,  A  Perplexed  Philosopher,  in  which  he  reviewed 
Mr.  Spencer's  earlier  and  later  opinions  on  the  land  problem. 
*  See  Progress  and  Poverty,  Book  vii,  chap.  lu,  and  elsewhere. 


INDEX 


! 


FT  ., 


>^%^'       ? 


\i' 


INDEX 


M 


ft 


Australia  and  the  single  tax,  177L 

Bonds,  taxation  of,  224 

Bullock,  Charles  J.,  on  single  tax,  208;  on  the  taxation  of  the  future 

increment,  213 
Burgess,  Edwin,  18-22;  letters,  18-22;  on  taxation  of  personal  property, 

18,  19;  on  comparative  effects  of  tariff  and  land  tax,  20-22 
Burtsell,  Mgr.  R.  L.,  counsel  of  Dr.  McGlynn,  69;  George's  Open  Letter 

to  the  Pope,  6gi. 

Canada  and  the  single  tax,  172-176 

Capital,  defined,  225;  effect  of  single  tax  on,  I05f. ;  vs.  labor,  161 
Confiscation,  defined,  203;  charge  of,  against  single  tax  unjustified,  202ff. 
Congress,  its  action  against  privilege,  164 

Dove,  Patrick  Edward,  11-17;  on  present  land  laws,  13;  on  the  right  of 
each  generation  to  the  land,  I4ff. ;  on  the  taxation  of  ground  rent,  17 

Economic  rent,  defined,  219.    See  also  Ground  rent 

Economists'  misconception  of  single  tax,  I98f.;  fostered  by  single  taxers, 

190-200 
Ely,  Richard  T.,  on  single  tax,  208 

Farmers,  effect  of  single  tax  on,  231 
Forest  lands,  taxation  of,  237 
Franchises,  taxation  of,  93-96 

George,  Henry,  38-64;  forerunners  of,  1-37,  239-276;  and  the  writing  of 
Progress  and  Poverty,  ^gfi. ;  made  single  tax  a  living  issue,  41 ;  pro- 
posed a  land  tax  to  prevent  monopolization  and  speculation,  41-44;  on 
rent  and  the  law  of  rent,  44-50;  how  equal  rights  to  the  land  may  be 
asserted  and  secured,  50-54;  the  land  tax  tried  by  the  canons  of  taxa- 
tion, 54-64 ;  his  Open  Letter  to  the  Pope,  68ff. ;  misconceptions  of  his 
opinions,  155-158;  and  the  economists,  190-200;  his  controversy  with 
Spencer,  194-200,  276;  influenced  by  Spencer,  276 

Germany  and  the  single  tax,  I79ff. 

Goddard,  Harold  C,  on  weaknesses  of  the  single  taxers,  190 

Great  Britain  and  the  single  tax,  181  f. 

Ground  rent,  defined,  26f.,  45,  71  f.,  87,  123;  nature  and  origin,  25,  I24ff. ; 
operation,  127;  office,  I28f. ;  cause,  I29f. ;  maintenance,  131;  illustra- 
tion, I32f.    See  also  Taxation  of  ground  rent,  and  Privilege 

Hadley,  Arthur  T.,  on  single  tax,  209 

Housing  problem,  conciliation  of  labor  with  capital  necessary  to  its  solu- 
tioni  161;  abolition  of  privilege  an  aid  to  solution,  162-170 

279 


r 


ii 


280 


Index 


Index 


281 


I 


Improvements,  effect  of  single  tax  on,  lo;!.;  taxation  of,  224 

Inquiry  into  the  Nature  and  Causes  of  the  Wealth  of  Nations,  i ;  quoted.  2 

Johnson,  Alvin  S.,  on  single  tax,  201-207 

Kiao-Chau  and  the  single  tax,  179 

Labor  vs.  capital,  161  ....         , 

Land,  division  of,  unjust,  17;  nationalization  of,  207-213 

Land  Question,  The,  quoted,  25-37,  146  ,  ..    ^,  o        *u^«*:«e 

Land  tax,  compared  with  tariff,  20-22;  non-shif table,  134-138;  authorities 

quoted,  i3off. ;  ultimately  burdenless,  138-149 
Landowners,  effect  of  single  tax  on,  230  ,«    ,  ,,         ^  ,,       T5..,f.^ii 

Leo  XIII,  letter  of  Henry  George  to,  a  mistake,  68;  letters  of  Mgr.  Burtsell 

regarding,  69f. 

Macdonell,  Sir  John,  23-37;  and  Henry  George,  lives  fo^P^^*^'  23f.;  on 
ground  rent,  its  origin  and  ownership,  25-29;  on  taxation  of  ground 

McGlynn,^e^v.  Edward.  65-74;  a  Catholic  priest  and  a  disciple  of  Henry 
George,  65 ;  controversy  with  his  ecclesiastical  superiors  over  single 
tax,  66ff.;  on  private  property  in  land,  7if.;  on  taxation  of  ground  rent, 

72ff. 
Mill,  John  Stuart,  5-10;  on  taxing  rent,  6-9 

New  Zealand  and  the  single  tax,  176 

Ogilvie,  William,  248-257;  foreshadowed  single  tax,  256f. 
Open  Letter  to  the  Pope,  a  mistake,  68;  Mgr.  Burtsell  on,  ^f. 
Our  Land  and  Land  Policy,  quoted,  41-44;  a  forerunner  of  Progress  ana 
Poverty,  41 

Paine,  Thomas,  258-263 

Perplexed  Philosopher,  A,  I94n.,  276 

Personal  property,  taxation  of,  i8f.,  224 

Physiocrats,  241  f. 

Principles  of  Political  Economy,  quoted,  6-9  ^      .,      .    r*-««  ♦^  k^ 

Privilege,  defined,  161  f.,  224f.;  a  disturbing  factor,  161;  its  abolition  to  be 

sought,  161-170;  congressional  action  against,  164;  taxation  ot,  225 
Production,  effect  of  single  tax  on,  loif. 

Professors,  and  the  single  tax,  201-217       , ,.      .         ,        „  ^  j    ..  <. 

Progress  and  Poverty,  the  writing  and  publication  of,  39n. ;  quoted,  44-04 
Property,  private  landed,  i6f.,  7if-.  266-275;  Dove  on,  Mtt.;  George  on, 

155-160 

Railways  and  the  single  tax,  io8f. 

Rent  concept,  150-155  ^.       ,  .    ,         e  ^-      A^t^^mA 

Rent,  taxation  of,  2-4,  6-10,  17;  Ricardo's .  law  of,  47;  economic,  defined, 

219.    See  also  Ground  rent  and  Taxation  of  ground  rent 
"Ricardo's  law  of  rent,"  quoted,  47;  certain  features  of,  now  discarded, 

Roman  Catholic  church,  controversy  in,  regarding  single  tax,  66-74 


Seager,  Henry  R.,  on  single  tax,  209 

Seligman,  E.  R.  A.,  on  single  tax,  209 

Shearman,  Thomas  G.,  75-119;  his  work  in  undeserved  neglect,  75f. ;  sup- 
plemented the  work  of  George,  77f . ;  life,  79-85 ;  on  ground  rent  as  the 
natural  tax,  86-101;  on  effects  of  natural  taxation,  101-119 

Single  tax,  controversy  in  Roman  Catholic  church,  66ff. ;  postulates  of, 
123-149,  215,  227;  in  Great  Britain,  i8if. ;  in  Canada,  172-176;  in 
Australasia,  I76ff. ;  in  Kiao-Chau,  179;  in  Germany,  I79ff. ;  in  the 
United  States,  183-189;  economists*  misconception  of,  190-200;  critics 
answered,  201-217;  not  inimical  to  middle  class,  204f. ;  not  confiscation, 
207-213;  Bullock  on,  208,  213;  Ely  on,  208;  Hadley  on,  209;  Johnson  on, 
201-207;  Seager  on,  209;  Seligman  on,  209;  defined,  219,  221 ;  effect  on 
wages,  226;  reasons  for,  227;  an  improvement  over  present  systems  of 
taxation,  228;  just  to  the  landowner,  230;  effect  on  farmers,  231 ;  effect 
on  tenants,  231 ;  a  "modus  operandi,"  234ff. ;  poll  of  professors  on, 
233 ;  foreshadowed  by  Ogilvie,  256f .    See  also  Taxation  of  ground  rent 

Single  taxers,  weaknesses  of,  190;  and  the  economists,  190-200;  their 
attacks  on  the  economists,  190-194 

Smith,  Adam,  1-4;  on  taxation  of  ground  rent,  2-4 

Social  Statics,  26S-276;  weakness,  275f. 

Spence,  Thomas,  243-247 

Spencer,  Herbert,  264-276;  his  controversy  with  George,  194-200;  his  in- 
fluence over  George,  276;  on  private  property  in  land,  266-275 

Stocks,  taxation  of,  224 

Tariff,  compared  with  land  tax,  20-22 

Taussig,  F.  W.,  on  taxation  of  the  future  increment,  213 

Taxation,  natural,  a  catechism  of,  218-237 

Taxation  of  franchises,  93-96 

Taxation  of  ground  rent,  134-149;  Adam  Smith  on,  2-4;  Mill  on,  6-10; 
Dove  on,  17;  Burgess  on,  2off. ;  Macdonell  on,  29-37;  Henry  George 
on,  42ff.,  50-54,  58-62,  64;  McGlynn  on,  72ff. ;  Shearman  on,  86-101; 
a  stimulus  to  production,  loif. ;  effect  on  wages,  101-105;  effect  on 
capital,  io5f . ;  and  the  security  of  property,  io6f. ;  and  improvements, 
I07f. ;  and  the  railways,  io8f . ;  and  large  fortunes,  I09f. ;  and  watered 
stocks,  iiof. ;  and  corruptly  obtained  franchises,  iiiff. ;  and  usurped 
lands,  113;  and  government  reform,  ii4f. ;  and  tenement  houses,  iiof. ; 
poll  of  professors  on,  233 

Taxation,  of  personal  property,  i8f.,  224;  of  improvements,  224;  of  stocks 
and  bonds,  224 

Tenants,  effect  of  single  tax  on,  231 

Theory  of  Human  Progression,  11;  quoted,  13-17 

Unearned  increment,  as  a  cause  for  the  settlement  of  open  land,  205ff.    See 

also  Ground  rent  and  Single  tax 
United  States  and  the  single  tax,  183-189 

Wages,  effect  of  single  tax  on,  101-105 


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